L2 Unit – 4 – Quiz

Which of the following can explain the phenomenon that stock market tends to rise more on sunny days?

Theory in which consumers make their own alternatives on basis of benefits and failure is classified as

In ‘simple heuristics’, rather than aiming for the best solution to a problem, people tend to choose the first alternative that gives an acceptable solution to the problem. This is known as

The ____________refers to the pattern that “people avoid realizing paper losses and seek to realize paper gains”. This was described first by Shefrin and Statman (1995).

Investors are assumed to be rational and thus will select a portfolio

Conventional theories presume that investors ____________, and behavioral finance presumes that they ____________.

Which cognitive bias played a significant role in the dot com crash?

___________ is an investor with a high tolerance for risk who approaches investing from an emotional perspective.

____________ is a foundational concept in investing.

Which of the following is not a subjective measure of risk?

What best describes the paradox of choice?

Complex statistical and mathematical theory is an approach, which is classified as

Which of the following is the least related to gambler’s fallacy?

Rational economic theories predict that your Willingness To Pay (WTP) for the bond would _____ your Willingness To Accept (WTA) compensation for it.

Cognitive consonance occurs when

_______ is the risk that the mispricing being exploited by the arbitrageur worsens in the short run.

Statman argues that ________ is consistent with some investors’ irrational preference for stocks with high cash dividends and with a tendency to hold losing positions too long.

These people are so well balanced; they cannot be placed in any specific quadrant, so they fall near the center. These are

The ______the economic resources an investor has, the ________ likely the person is to be a passive investor.

What are the three primary types of influence that affect individuals’ decisions, behaviors, purchases, and lifestyles?

The premise of behavioral finance is that

Arbitrageurs may be unable to exploit behavioral biases due to ____________.
I) Fundamental Risk
II) Implementation Costs
III) Model Risk
IV) Conservatism
V) Regret Avoidance

Which of the following is a market anomaly?

The aspect of personality deals with how confidently the investor approaches life, regardless of whether it is his approach to his career, his health, his money. These are important emotional choices, and they are dictated by how confident the investor is about some things or how much he tends to worry about them. This is known as ______

People who are willing to put it all on one bet and go for it because they have confidence. They are difficult to advice, because they have their own ideas about investing. They are willing to take risks, and they are volatile clients from an investment counsel point of view. These people are known as