完整版投资学第7版TestBank答案12.docx

1、完整版投资学第7版TestBank答案12Multiple Choice Questions1.Conventional theories presume that investors and behavioral financepresumes that they .A)are irrational; are irrationalB)are rational; may not be rationalC)are rational; are rationalD)may not be rational; may not be rationalE)may not be rational; are r

2、ationalAnswer: B Difficulty: Easy2.The premise of behavioral finance is thatA)conventional financial theory ignores how real people make decisions and that people make a difference.B)conventional financial theory considers how emotional people make decisions but the market is driven by rational util

3、ity maximizing investors.C)conventional financial theory should ignore how the average person makes decisions because the market is driven by investors that are much more sophisticated than the average person.D)B and CE)none of the aboveAnswer: A Difficulty: Easy3.Some economists believe that the an

4、omalies literature is consistent with investors and .A)ability to always process information correctly and therefore they infer correct probability distributions about future rates of return; given a probability distribution of returns, they always make consistent and optimal decisionsB)inability to

5、 always process information correctly and therefore they infer incorrect probability distributions about future rates of return; given a probability distribution of returns, they always make consistent and optimal decisionsC)ability to always process information correctly and therefore they infer co

6、rrect probability distributions about future rates of return; given a probability distribution of returns, they often make inconsistent or suboptimal decisionsD)inability to always process information correctly and therefore they infer incorrect probability distributions about future rates of return

7、; given a probability distribution of returns, they often make inconsistent or suboptimal decisionsE)none of the aboveAnswer: D Difficulty: Moderate4.Information processing errors consist ofI)forecasting errorsII)overconfidenceIII)conservatismIV)framingA)I and IIB)I and IIIC)III and IVD)IV onlyE)I,

8、II and IIIAnswer: E Difficulty: Moderate5.Forecasting errors are potentially important becauseA)research suggests that people underweight recent information.B)research suggests that people overweight recent information.C)research suggests that people correctly weight recent information.D)either A or

9、 B depending on whether the information was good or bad.E)none of the above.Answer: B Difficulty: Moderate6.DeBondt and Thaler believe that high P/E result from investorsA)earnings expectations that are too extreme.B)earnings expectations that are not extreme enough.C)stock price expectations that a

10、re too extreme.D)stock price expectations that are not extreme enough.E)none of the above.Answer: A Difficulty: Moderate7.If a person gives too much weight to recent information compared to prior beliefs, they would make errors.A)framingB)selection biasC)overconfidenceD)conservatismE)forecastingAnsw

11、er: E Difficulty: Moderate8.Single men trade far more often than women. This is due to greater amongmen.A)framingB)regret avoidanceC)overconfidenceD)conservatismE)none of the aboveAnswer: C Difficulty: Moderate9. may be responsible for the prevalence of active versus passiveinvestments management.A)

12、Forecasting errorsB)OverconfidenceC)Mental accountingD)ConservatismE)Regret avoidanceAnswer: B Difficulty: Moderate10.Barber and Odean (2000) ranked portfolios by turnover and report that the difference in return between the highest and lowest turnover portfolios is 7% per year. They attribute this

13、toA)overconfidenceB)framingC)regret avoidanceD)sample neglectE)all of the aboveAnswer: A Difficulty: Moderate11. bias means that investors are too slow in updating their beliefs in response toevidence.A)framingB)regret avoidanceC)overconfidenceD)conservatismE)none of the aboveAnswer: D Difficulty: M

14、oderate12.Psychologists have found that people who make decisions that turn out badly blame themselves more when that decision was unconventional. The name for this phenomenon isA)regret avoidanceB)framingC)mental accountingD)overconfidenceE)obnoxicityAnswer: A Difficulty: ModerateRationale: An inve

15、stments example given in the text is buying the stock of a start-up firm that shows subsequent poor performance, versus buying blue chip stocks that perform poorly. Investors tend to have more regret if they chose the less conventional start-up stock. DeBondt and Thaler say that such regret theory i

16、s consistent with the size effect and the book-to-market effect.13.An example of is that a person may reject an investment when it is posed interms of risk surrounding potential gains but may accept the same investment if it is posed in terms of risk surrounding potential losses.A)framingB)regret av

17、oidanceC)overconfidenceD)conservatismE)none of the aboveAnswer: A Difficulty: Moderate14.Statman (1977) argues that is consistent with some investors irrationalpreference for stocks with high cash dividends and with a tendency to hold losing positions too long.A)mental accountingB)regret avoidanceC)

18、overconfidenceD)conservatismE)none of the aboveAnswer: A Difficulty: Moderate15.An example of is that it is not as painful to have purchased a blue-chip stockthat decreases in value, as it is to lose money on an unknown start-up firm.A)mental accountingB)regret avoidanceC)overconfidenceD)conservatis

19、mE)none of the aboveAnswer: B Difficulty: Moderate16.Arbitrageurs may be unable to exploit behavioral biases due to .I)fundamental riskII)implementation costsIII)model riskIV)conservatismV)regret avoidanceA)I and II onlyB)I, II, and IIIC)I, II, III, and VD)II, III, and IVE)IV and VAnswer: B Difficul

20、ty: Moderate17. are good examples of the limits to arbitrage because they show that thelaw of one price is violated.I)Siamese Twin CompaniesII)Unit trustsIII)Closed end fundsIV)Open end fundsV)Equity carve outsA)I and IIB)I, II, and IIIC)I, III, and VD)IV and VE)VAnswer: C Difficulty: Moderate18. wa

21、s the grandfather of technical analysis.A)Harry MarkowitzB)William SharpeC)Charles DowD)Benjamin GrahamE)none of the aboveAnswer: C Difficulty: EasyRationale: Charles Dow, the originator of the Dow Theory, was the grandfather of technical analysis. Benjamin Graham might be considered the grandfather

22、 of fundamental analysis. Harry Markowitz and William Sharpe might be considered the grandfathers of modern portfolio theory.19.The goal of the Dow theory is toA)identify head and shoulder patterns.B)identify breakaway points.C)identify resistance levels.D)identify support levels.E)identify long-ter

23、m trends.Answer: E Difficulty: EasyRationale: The Dow theory uses the Dow Jones Industrial Average as an indicator of long-term trends in market prices.20.A long-term movement of prices, lasting from several months to years is calledA)a minor trendB)a primary trendC)an intermediate trendD)trend anal

24、ysisE)B and DAnswer: B Difficulty: EasyRationale: Minor trends are merely day-to-day price movements; intermediate trends are or offsetting movements in one direction after longer-term movements in another direction; trends lasting for the period described above are primary trends.21.A daily fluctua

25、tion of little importance is called A)a minor trendB)a primary trendC)an intermediate trendD)a market trendE)none of the aboveAnswer: A Difficulty: Easy22.Price movements that are caused by short-term deviations of prices from the underlying trend line are calledA)primary trends.B)secondary trends.C

26、)tertiary trends.D)Dow trends.E)contrary trends.Answer: B Difficulty: EasyRationale: The secondary trend is caused by these deviations, which are eliminated by corrections that bring the prices back to the trend lines.23.The Dow theory posits that the three forces that simultaneously affect stock pr

27、ices areI)primary trendII)intermediate trendIII)momentum trendIV)minor trendV)contrarian trendA)I, II, and IIIB)II, III, and IVC)III, IV and VD)I, II, and IVE)I, III, and VAnswer: D Difficulty: Moderate24.The Elliot Wave Theory .A)is a recent variation of the Dow TheoryB)suggests that stock prices c

28、an be described by a set of wave patter nsC)is similar to the Kondratieff Wave theoryD)A and Be) A, B, and CAn swer: E Difficulty: EasyRati on ale: Both the Elliot Wave Theory and the Kon dratieff Wave Theory are rece nt variati ons on the Dow Theory, which suggests that stock prices move in ide nti

29、fiable wave patter ns.25.A trin ratio of less than 1.0 is considered as a .A)bearish signalB)bullish signalC)bearish signal by some technical analysts and a bullish signal by other technical an alystsD)bullish sig nal by some fun dame ntalistsE)C and DAn swer: B Difficulty: EasyRati on ale: A trin r

30、atio of less tha n 1.0 is con sidered bullish because the decli ning stocks have lower average volume tha n the adva ncing stocks, in dicati ng net buying pressure.26.On October 29, 1991 there were 1,031 stocks that advaneed on the NYSE and 610 thatdecli ned. The volume in adva ncing issues was 112,

31、866,000 and the volume in decli ning issues was 58,188,000. The trin ratio for that day was and tech ni cal an alystswere likely to be .A)0.87, bullishB)0.87, bearishC)1.15, bullishD)1.15, bearishE)none of the aboveAn swer: A Difficulty: ModerateRatio nale: (1,031/610) / (112,866,000/58,388,000) = 0.87. A trin ratio less than 1 is con sidered bullish because adva ncing stocks have a higher volume tha n decli ning stocks, in dicat ing a buying pressure.27.In regard t