This quiz works best with JavaScript enabled. Home > Finance Theory > Behavioral Finance > Behavioral Finance – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Finance Quiz 5 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Low-Medium merupakan risk tolerance level untuk tipe BIT Friendly Follower A) CORRECT. B) SALAH. Show Answer Correct Answer: A) CORRECT. 2. Occurs when your views are swayed or influenced by the views of others. A) Conformation Bias. B) Beauty Bias. Show Answer Correct Answer: A) Conformation Bias. 3. Behavioral finance is the study of the influence of psychology on the behaviour of financial practitioners and the subsequent effect on markets. (Sewell) A) True. B) False. Show Answer Correct Answer: A) True. 4. Interest can be compounded over different lengths of time. Which is the best option for building wealth? A) Semi-annually:(twice a year) every six months. B) Quarterly:(4 times a year) computed and added at the end of each quarter (3 months). C) Monthly:end of each month. D) None of above. Show Answer Correct Answer: C) Monthly:end of each month. 5. Review! You'll receive this tax form from your employer in January A) W2. B) W4. C) 1040. D) 1099. Show Answer Correct Answer: A) W2. 6. Choose the correct definition of behavioral Finance A) Behavioural finance attempts to explain how decision makers take financial decisions in real life, and why their decisions might not appear to be rational every time and, therefore, have unpredictable consequences. B) Behavioural finance is a hypothesis that states that share prices reflect all information and consistent alpha generation is impossible. Show Answer Correct Answer: A) Behavioural finance attempts to explain how decision makers take financial decisions in real life, and why their decisions might not appear to be rational every time and, therefore, have unpredictable consequences. 7. It depends on how humans actually behaves, it arguesthat it is human are irrational and the decisions they aremaking are influenced by their emotions and biases. Itcombines the effect of finance and psychology. A) Behavioral Finance. B) Traditional Finance. Show Answer Correct Answer: A) Behavioral Finance. 8. If a customer is looking at a perceived loss considering recent price level and taking investment decision based on movement of stock from that specific price level without considering funamental/technical reasoning, what kind of bias client has? A) Availability bias. B) Regret Aversion. C) Mental accounting. D) Anchoring/adjustment bias. Show Answer Correct Answer: D) Anchoring/adjustment bias. 9. What is behavioral finance? A) The study of market efficiency and rational decision-making. B) The study of mathematical models in finance. C) The study of how psychological factors influence financial decision-making. D) None of above. Show Answer Correct Answer: C) The study of how psychological factors influence financial decision-making. 10. Assume you play a lottery, which earns you $ 0 with probability 0.9 and $ 1000 with probability 0.1 (Option A). Your second option is to win a certain amount of $ 100 (Option B). Which option would you choose, if you were risk-averse (without knowing the precise utility function)? A) Option A. B) Option B. Show Answer Correct Answer: B) Option B. 11. "Current prices fully reflect all information about historical prices and turnovers." Which type of information efficiency is described by the quote above? A) Weak IE. B) Semi-strong IE. C) Strong IE. D) None of above. Show Answer Correct Answer: A) Weak IE. 12. This value that drives financial behaviors focuses on the tangible aspects of our life and world. A) Social. B) Financial. C) Inner. D) Physical. Show Answer Correct Answer: D) Physical. 13. Which statement best describes the evolution from traditional finance to behavioral finance? A) Traditional finance assumes perfectly rational decision-making, while behavioral finance recognizes human biases and heuristics. B) Traditional finance emphasizes the importance of market efficiency, while behavioral finance focuses on portfolio diversification. C) Traditional finance relies on mathematical models, while behavioral finance relies on qualitative analysis. D) None of above. Show Answer Correct Answer: A) Traditional finance assumes perfectly rational decision-making, while behavioral finance recognizes human biases and heuristics. 14. You can state this statement for which bias: "Don't throw Good Money after Bad!!" A) Escalation of commitment. B) Mental accounting. C) Regret Aversion. D) Availability Bias. Show Answer Correct Answer: A) Escalation of commitment. 15. The process of selecting among alternatives A) Status. B) Choice. C) Behavior. D) Consumer. Show Answer Correct Answer: B) Choice. 16. Judging a person based on their name and perceived background A) Name BIas. B) Gender Bias. Show Answer Correct Answer: A) Name BIas. 17. What is the role of herding behavior in behavioral finance? A) Individuals tend to follow the actions and decisions of the crowd, leading to irrational market movements. B) Individuals seek out diverse investment opportunities to reduce risk. C) Individuals rely on fundamental analysis to make investment decisions. D) None of above. Show Answer Correct Answer: A) Individuals tend to follow the actions and decisions of the crowd, leading to irrational market movements. 18. Because some people see women as less competent than men, they may undervalue theiraccomplishments and overvalue their mistakes. A) Attribution Bias. B) Conformation Bias. Show Answer Correct Answer: A) Attribution Bias. 19. What is the main difference between traditional finance and behavioral finance? A) Traditional finance focuses on qualitative analysis, while behavioral finance relies on mathematical models. B) Traditional finance is based on psychological theories, while behavioral finance is based on economic theories. C) Traditional finance assumes rational decision-making, while behavioral finance recognizes the influence of biases. D) None of above. Show Answer Correct Answer: C) Traditional finance assumes rational decision-making, while behavioral finance recognizes the influence of biases. 20. What does the anchoring bias refer to in behavioral finance? A) The tendency to rely heavily on the initial information encountered. B) The tendency to overestimate one's own abilities and knowledge. C) The tendency to attribute success to skill rather than luck. D) None of above. Show Answer Correct Answer: A) The tendency to rely heavily on the initial information encountered. ← PreviousNext →Related QuizzesFinance Theory QuizzesBehavioral Finance Quiz 1Behavioral Finance Quiz 2Behavioral Finance Quiz 3Behavioral Finance Quiz 4Behavioral Finance Quiz 6Behavioral Finance Quiz 7Behavioral Finance Quiz 8Behavioral Finance Quiz 9Behavioral Finance Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books