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Behavioral Finance Quiz 2 (30 MCQs)

Quiz Instructions

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1. Which of the following statements best defines Exchange Value?
2. 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.
3. Trusting one's gut or following the inner voice, helps overcome a sudden spending with this life value:
4. Is when peopleoverestimate the odds of something happeningsimply because the outcome is desirable.
5. A long term goal .....
6. Judgement biases affect the [ ..... ] of a decision problem.
7. What is the phenomenon where observed prices soar far higher than fundamentals and rational analysis would suggest?
8. 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 .....
9. 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.
10. Which flower became absurdly expensive in the Netherlands in the 1630s?
11. ..... leads to investors misestimate true probabilities?
12. A(n) ..... is a predictable error in remembering, calculating, and reasoning
13. Also called like-likes-like, this bias refers to our tendency to gravitate toward people similar toourselves.
14. Which is better to have?
15. The following life values can have an effect on our money habits:
16. According to Behavioral Finance ..... ?
17. In which bias we give more weightage to information which receives high media attention.
18. Suppose there are two investors:Michael and Steve. Both have pension funds, into which they deposit money each month from their paychecks. Both are in their early 30s, and anticipate retiring at around age 65. Neither anticipates withdrawing any money from his pension fund prior to retirement.Michael watches his pension fund closely, looking each week at whether has gone up or down in value. On a week to week basis, the US equity markets are down almost as often as they are up. Steve, on the other hand, only checks the value of his pension fund once every five years or so. On a five-year basis, the US equity markets are down less than 10% of the time.Michael's pension fund money is all in bonds, while Steve's is all in equities.Which single feature of Prospect Theory provides the best explanation for the two men's different portfolio allocations?
19. Review! When taking out a loan, the amount of money initially borrowed is called the .....
20. An efficient market is defined as one in which:
21. The people with this life value think more about the sustainability of their money and generally have more in reserve:
22. Which of the following is not part of the behavioural finance theory used for article 5 (Behavioural Finance:The Emergence and Development Trends)
23. Which element below is not included in the Heuristic Decision Process?
24. What is noise trader risk in the context of behavioral finance?
25. The following are not included in the Behavioral Investor Type, namely.....
26. A marketing/advertising strategy that uses charts, graphs or statistics that are intentionally misleading
27. Customer takes out excess returns after selling top performing stock considering it free money ( doesn't consider overall portfolio returns) and further place capital gains in risky investment not aligning with his/her financial goals. Which bias client has?
28. Based on the Article 2 titled Countries and Culture in Behavioral Finance, Women are more willing to take risks in their investment decisions.
29. Emotional is the Primary biases for BIT Passive Preserver
30. This value that drives financial behaviors focuses on our desire for belonging and relatedness to our family, friends, teams, community, etc.
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