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BUS 405 Week 2 Chapter 8 Behavioral Finance and the Psychology of Investing

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BUS 405 Week 2 Chapter 8 Behavioral Finance and the Psychology of Investing
This document of BUS 405 Week 2 Chapter 8 Behavioral Finance and the Psychology of Investing includes:

1. What is the area of finance called that addresses issues such as how reasoning errors affect investment decisions?

2. Which one of the following is the basis for prospect theory?

3. Which one of the following defines frame dependence?

4. Mental accounting is the process of associating a stock with its:

5. Loss aversion is defined as:

6. Representativeness heuristic is best explained as:

7. The belief that information you hold is superior to information held by other investors best describes:

8. An unwillingness to take a risk after a loss describes:

9. Which one of the following is the tendency to believe that random events that occur in clusters are not really random?

10. Which one of the following best describes heuristics?

11. The concept that well-capitalized, rational traders may be unable to correct a mispricing defines which one of the following terms?

12. Which one of the following is a trader whose trades are not based on meaningful financial analysis or information?

13. Which one of the following risks is related to irrational beliefs?

14. Technical analysis is the study of which one of the following as the basis for trading?

15. Dow theory is a method of predicting future market movements based on which of the following Dow Jones averages?

I. industrial

II. transportation

III. utilities

IV. commodities

16. According to Elliott wave theory, market predictions should be based on which one of the following?

17. The minimum price at which a security is expected to trade is called the:

18. The maximum price at which a security is expected to trade is called the:

19. The measure of performance of one investment compared to another investment is called the:
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