This quiz works best with JavaScript enabled. Home > Finance Theory > Behavioral Finance > Behavioral Finance – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Finance Quiz 2 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. According to Dave Ramsey, how much of your success with reaching your financial goals is related to controlling your behavior A) 20%. B) 40%. C) 60%. D) 80%. Show Answer Correct Answer: D) 80%. 2. What is the purpose of Nostalgia in ads? A) Desire to return in thought or fact to a former time. B) A sentence that withholds its main idea until the end. C) A person or thing that makes the future look better than the present. D) A brief story or tale told by a character in literature. Show Answer Correct Answer: A) Desire to return in thought or fact to a former time. 3. If I choose to spend $ 15 at Starbucks, I give up the option of spending that same $ 15 on gas for my car. This concept is referred to as: A) Regret. B) Opportunity cost. C) Decision tree matrix. D) Neuroeconomics. Show Answer Correct Answer: B) Opportunity cost. 4. Which of the following statements best defines Opportunity Cost? A) What you can obtain for an item at a later time. B) How helpful an item is given the context of a current situation. C) How well something satisfies a person's wants or needs. D) What we lose by giving up the other provided choice. Show Answer Correct Answer: D) What we lose by giving up the other provided choice. 5. When my best friend buys new shoes that I think are "cool", I may begin to want the shoes as well, even if I like my current shoes and they meet my needs. Why? A) The desire to "fit in" socially is hard-wired in our brain. B) I deserve to have things that are at least as nice as what my friend has. C) My present self is committed to delaying gratification. D) My friend is considered an "influencer" for me in terms of neuroeconomics. Show Answer Correct Answer: A) The desire to "fit in" socially is hard-wired in our brain. 6. Review! You'll fill this out when you begin a new job A) W2. B) W4. C) 1040. D) 1099. Show Answer Correct Answer: B) W4. 7. Mental Accounting refers to the willingness of people to spend their money based on subjective evaluation, that may lead to irrational decision. A) True. B) False. Show Answer Correct Answer: A) True. 8. Why are non-celebrities able to influence buying behavior? A) They have third party credibility. B) They are more relatable, causing us to trust them. C) They are paid to advertise. D) They use the celebrity/eye candy appeal. Show Answer Correct Answer: B) They are more relatable, causing us to trust them. 9. What is the tendency to overestimate the importance of recent events and underestimate the likelihood of long-term trends? A) Recency bias. B) Clustering illusion. C) Availability bias. D) Confirmation bias. Show Answer Correct Answer: A) Recency bias. 10. The tendency to put someone on a pedestal or think more highly of them afterlearning something impressive about them A) The Halo/Horns Effect. B) The Contrast Effect-. Show Answer Correct Answer: A) The Halo/Horns Effect. 11. Which of the following statements best defines Exchange Value? A) What you can obtain for an item at a later time. B) How helpful an item is given the context of a current situation. C) How well something satisfies a person's wants or needs. D) What we lose by giving up the other provided choice. Show Answer Correct Answer: A) What you can obtain for an item at a later time. 12. Let's assume we all have preferences that are consistent with Prospect Theory. Suppose also that we could select whether our salaries are paid on a weekly basis or a monthly basis. Which alternative would we pick, assuming that the total monthly salary is the same as the sum of the weekly payments? Ignore the impact of extra interest that we could earn in our bank accounts if we were paid on a more frequent basis. A) Weekly. B) Monthly. Show Answer Correct Answer: A) Weekly. 13. Trusting one's gut or following the inner voice, helps overcome a sudden spending with this life value: A) Inner. B) Social. C) Physical. D) Financial. Show Answer Correct Answer: A) Inner. 14. Is when peopleoverestimate the odds of something happeningsimply because the outcome is desirable. A) Desirability Effect. B) Illusion of Control. Show Answer Correct Answer: A) Desirability Effect. 15. A long term goal ..... A) Only matters later in life. B) Usually requires more planning, takes a long time to accomplish and work toward. C) Can be the same as a short term goal. D) None of above. Show Answer Correct Answer: B) Usually requires more planning, takes a long time to accomplish and work toward. 16. Judgement biases affect the [ ..... ] of a decision problem. A) Input. B) Valuation method. C) Outcome. D) None of above. Show Answer Correct Answer: A) Input. 17. What is the phenomenon where observed prices soar far higher than fundamentals and rational analysis would suggest? A) Arbitrage. B) Crash. C) Market efficiency. D) Bubble. Show Answer Correct Answer: D) Bubble. 18. The vast majority of people tip restaurant servers even though there is no law requiring it. This is an example of economic behavior being influenced by ..... A) The endowment effect. B) Left digit bias. C) Anchoring. D) Social norms. E) Speculation. Show Answer Correct Answer: D) Social norms. 19. Because the US has a prevalent culture of consumerism, it is common for people to go into debt to buy things that they cannot afford. A) True. B) False. Show Answer Correct Answer: A) True. 20. Which flower became absurdly expensive in the Netherlands in the 1630s? A) Roses. B) Tulips. C) Carnations. D) Hydrangeas. E) Lilies. Show Answer Correct Answer: B) Tulips. ← PreviousNext →Related QuizzesFinance Theory QuizzesBehavioral Finance Quiz 1Behavioral Finance Quiz 3Behavioral Finance Quiz 4Behavioral Finance Quiz 5Behavioral Finance Quiz 6Behavioral Finance Quiz 7Behavioral Finance Quiz 8Behavioral Finance Quiz 9Behavioral Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books