Deck 4: Research Methodology and Theories on the Uses of Accounting Information

Question 1

Which of the following cognitive biases in finance suggests that people tend to be overconfident in their predictions of the future

A)Mental accounting
B)Biased expectations
C)Reference dependence
D)Representativeness heuristic:

Answer 1

B

Question 2

The efficient market hypothesis holds that that financial markets price assets at their intrinsic worth,given all available information.Which of the following forms of the efficient market hypothesis defines all available information as all publicly available information including past stock prices?

A)Weak
B)Semi-weak
C)Semi-strong
D)Strong

Answer 2

C

Question 3

Which of the following research approaches is based on the concept of utility or usefulness?

A)Deductive
B)Behavioral
C)Inductive
D)Pragmatic

Answer 3

D

Question 4

Which of the following is not viewed as a cost to the principal in an agency relationship?

A)Monitoring expenditures by the principal
B)Monitoring expenditures by the agent
C)Bonding expenditures by the agent
D)The residual loss

Question 5

What theory on the outcomes of providing accounting information attempts to assess an individual's ability to use information?

A)Agency theory
B)Efficient markets
C)Human information processing
D)Capital asset pricing model

Question 6

What theory on the outcomes of providing accounting information rejects the view that knowledge of accounting is grounded in objective principles

A)Agency theory
B)Critical perspective
C)Fundamental analysis
D)Capital asset pricing model

Question 7

Which of the following outcomes of providing accounting information is based on the supply and demand model?

A)Agency theory
B)Efficient markets
C)Fundamental analysis
D)Capital asset pricing model

Question 8

Which of the following outcomes of providing accounting information is an attempt to identify individual securities that are mispriced by reviewing all available financial information?

A)Agency theory
B)Efficient markets
C)Fundamental analysis
D)Capital asset pricing model

Question 9

Which of the following anomalies are related to strategies designed to outperform the market?

A)Calendar anomalies
B)Value anomalies
C)Technical anomalies
D)Other anomalies

Question 10

Which of the following research approaches is attributed to DR Scott?

A)Deductive
B)Ethical
C)Inductive
D)Pragmatic

Question 11

Which of the following is not a conclusion that has been drawn from human information processing research?

A)An individual's perception of information is quite selective.That is,since individuals are capable of comprehending only a small part of their environment,their anticipation of what they expect to perceive about a particular situation will determine to a large extent what they do perceive.
B)Since individuals make decisions on the basis of a small part of the total information available,they do not have the capacity to make optimal decisions
C)Individuals are able to process and integrate large amounts of information simultaneously
D)Since individuals are incapable of integrating a great deal of information,they process information in a sequential fashion.

Question 12

Which of the following outcomes of providing accounting information is an attempt to deal with both risks and returns?

A)Agency theory
B)Efficient markets
C)Fundamental analysis
D)Capital asset pricing model

Question 13

Which of the following cognitive biases in finance suggests that people tend to judge Event A to be more probable than Event B when A appears more representative than B.

A)Mental accounting
B)Biased expectations
C)Reference dependence
D)Representativeness heuristic

Question 14

Which of the following research approaches emphasizes going from the specific to the general?

A)Deductive
B)Behavioral
C)Inductive
D)Pragmatic

Question 15

Which of the following cognitive biases in finance suggests that the majority of people perceive a dividend dollar differently from a capital gains dollar?

A)Mental accounting
B)Biased expectations
C)Reference dependence
D)Representativeness heuristic:

Question 16

The efficient market hypothesis holds that that financial markets price assets at their intrinsic worth,given all available information.Which of the following forms of the efficient market hypothesis defines all available information as knowledge of past security prices?

A)Weak
B)Semi-weak
C)Semi-strong
D)Strong

Question 17

The efficient market hypothesis holds that that financial markets price assets at their intrinsic worth,given all available information.Which of the following forms of the efficient market hypothesis defines all available information as information,including security price trends,publicly available information,and insider information?

A)Weak
B)Semi-weak
C)Semi-strong
D)Strong

Question 18

Which of the following anomalies are related to investing techniques that attempt to forecast security prices by studying past prices and other related statistics?

A)Calendar anomalies
B)Value anomalies
C)Technical anomalies
D)Other anomalies

Question 19

What theory on the outcomes of providing accounting information attempts to answer the question: What is an individual's expected benefit from a particular course of action?

A)Agency theory
B)Efficient markets
C)Fundamental analysis
D)Capital asset pricing model

Question 20

Which of the following anomalies are related to particular time periods?

A)Calendar anomalies
B)Value anomalies
C)Technical anomalies
D)Other anomalies