Question 1

Compare and contrast the efficient market hypothesis with the school of thought termed behavioral finance.

Accepted Answer

The answer of Compare and contrast the efficient market hypothesis...

Question 2

Kahneman and Tversky (1973) reported that __________ give too much weight to recent experience compared to prior beliefs when making forecasts.

Accepted Answer

Kahneman and Tversky (1973) reported that people give too much weight to recent experience compared to prior beliefs when making forecasts.

Question 3

Discuss what technical analysis is, what technical analysts do, and the relationship between technical analysis, fundamental analysis, and behavioral finance.

Accepted Answer

The answer of Discuss what technical analysis is, what technical...

Question 4

__________ effects can help explain momentum in stock prices.

Accepted Answer

Mental accounting effects can help explain momentum in stock prices.

Question 5

Barber and Odean (2001) report that men __________ women.

Accepted Answer

Barber and Odean (2001) report that men trade more frequently than women and have lower returns.

Question 6

____________ measures the extent to which a security has outperformed or underperformed either the market as a whole or its particular industry.

Accepted Answer

Relative strength measures the extent to which a security has outperformed or underperformed either the market as a whole or its particular industry.Relative strength is computed by calculating the ratio of the price of the security to a price index for the industry.

Question 7

Barber and Odean (2001) report that women trade __________ frequently than men.

Accepted Answer

Barber and Odean (2001) report that men trade more frequently than women.

Question 8

Studies of closed-end funds find __________, which __________ the EMH.

Accepted Answer

Studies of closed-end funds find prices at premiums and discounts to NAV, which is inconsistent with the EMH.

Question 9

Behavioral finance posits that investors possess information processing errors.Discuss the importance of information processing errors, then list and explain the four information processing errors discussed in the text.

Accepted Answer

The answer of Behavioral finance posits that investors possess information...

Question 10

Studies of Siamese twin companies find __________, which __________ the EMH.

Accepted Answer

Studies of Siamese twin companies find incorrect relative pricing, which does not support the EMH.

Question 11

Barber and Odean (2001) report that women __________ men.

Accepted Answer

Barber and Odean (2001) report that men trade more frequently than women and have lower returns.

Question 12

Behavioral finance posits that investors possess behavioral biases.Discuss the importance of behavioral biases, then list and explain the four behavioral biases discussed in the text.

Accepted Answer

The answer of Behavioral finance posits that investors possess behavioral...

Question 13

Studies of equity carve-outs find __________, which __________ the EMH.

Accepted Answer

Studies of equity carve-outs find evidence against the law of one price, which violates the EMH.

Question 14

Barber and Odean (2001) report that men trade __________ frequently than women.

Accepted Answer