This quiz works best with JavaScript enabled. Home > Finance > Finance Theory > Behavioral Finance > Behavioral Finance – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Behavioral Finance Quiz 7 (26 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Things you want to accomplish A) Influence. B) Credit. C) Debt. D) Goals. Show Answer Correct Answer: D) Goals. 2. People perceived as attractive can be viewed more positively and treated more favorably. A) Affinity Bias. B) Beauty Bias. Show Answer Correct Answer: B) Beauty Bias. 3. What is the misconception that arises from the human intuition about the overall odds of a random event in the short run? A) Gambler's fallacy. B) Aversion to ambiguity. C) Recency bias. D) Anchoring and adjustment. Show Answer Correct Answer: A) Gambler's fallacy. 4. The idea that items necessary to life are relatively inexpensive, but luxury items are very expensive, is known as: A) The paradox of value. B) The paradox of thrift. C) The law of supply and demand. D) The law of economics. Show Answer Correct Answer: A) The paradox of value. 5. Think back to your personal values assessment. Your top 5 values ..... A) Are internal principles that help guide my decision making. B) Are 5 traits of my personality. C) Are not important when it comes to money. D) Are the most valuable items to me. Show Answer Correct Answer: A) Are internal principles that help guide my decision making. 6. Assume you visit a casino. The last seven draws were black and nearly all money is placed on the next draw being red. Which bias is at work? A) Hindsight Bias. B) Overconfidence. C) Availability Bias. D) Representativeness Heuristics. Show Answer Correct Answer: D) Representativeness Heuristics. 7. SMART goals are helpful to organize your goals into an action plan. The benefits of setting quality goals, especially that involve money planning, are: A) Prepares us for a bright future. B) Helps us improve ourselves, keeps us on track. C) Allows us to work towards the things we really want to accomplish. D) All of the above. Show Answer Correct Answer: D) All of the above. 8. The original amount of money borrowed or loaned is known as the ..... A) Interest. B) Interest Rate. C) Principal. D) None of above. Show Answer Correct Answer: C) Principal. 9. You are stranded in the desert and are really hungry for some food (even a fruit cake you hated as a kid that you would not touch). You are magically given 2 choices:A) a brand new iPhone B) an order of Chipotle and the fruit cake.You choose option B. What basic principal of behavioral finance says option B is the correct choice at that moment? A) Savings. B) Interest. C) Paradox of Value. D) None of above. Show Answer Correct Answer: C) Paradox of Value. 10. An arrangement to receive cash, goods, or services now and pay for them in the future A) False statistics. B) Debt. C) Confirmation bias. D) Credit. Show Answer Correct Answer: D) Credit. 11. People read, study a lot and apply their skills to arrive at investment decisions.BUT their actions replicate the action of others around them.Social influence has an immense power on individual judgement. *This is known as ..... A) Social bias. B) Group behavior. C) Herding. D) General anomaly. Show Answer Correct Answer: C) Herding. 12. If there is a low probability for receiving high gains, people are ..... A) Risk seeking. B) Risk averse. C) Risk neutral. D) None of above. Show Answer Correct Answer: A) Risk seeking. 13. This is the general message of the Bandwagon advertising technique: A) Everyone is doing it! You should too!. B) Feeling good about someones positive association. C) A famous person talks about how something has helped them. D) Feeling bad about someones negative association. Show Answer Correct Answer: A) Everyone is doing it! You should too!. 14. Is a disproportionate weight in favor of or against an idea or thing, usually in a way that is closed-minded, prejudicial, or unfair A) Confidence. B) Bias. Show Answer Correct Answer: B) Bias. 15. A heuristic is a(n) ..... used when make decisions. A) Justification for behaving irrationally. B) A mental shortcut. C) A cognitive bias. D) Social norm. Show Answer Correct Answer: B) A mental shortcut. 16. Understanding where the markets are going and so on is one of the most important skills in Finance and Investing. A) Overconfidence Bias. B) Psychological Bias. Show Answer Correct Answer: A) Overconfidence Bias. 17. Review! Your employer will use the information you provide on this form to determine how much money to withhold from your paycheck for federal income tax. A) W4. B) 1040. C) W2. D) 1099. Show Answer Correct Answer: A) W4. 18. In the desert-diamond paradox of value situation, why would you NOT select water EVERY time you were offered a choice between water and diamonds? A) Water is more valuable than diamonds, both physically and financially. B) The use value of diamonds is higher than the use value of water. C) The water will expire by the time you get to the next booth. D) The utility of water decreases after your basic needs are met. Show Answer Correct Answer: D) The utility of water decreases after your basic needs are met. 19. What does "utility" mean? A) How much you're able to sell a good or service for. B) The increase in value over time. C) How well a good or service satisfies your needs and desire. D) None of above. Show Answer Correct Answer: C) How well a good or service satisfies your needs and desire. 20. Who is today's Gaspol Behavioral Finance speaker? A) Mr Renaldo Suryanto. B) Mr Reynard Suryanto. C) Mr Reginald Suryanto. D) Mr Reynaldi Suryanto. Show Answer Correct Answer: C) Mr Reginald Suryanto. 21. The way a person acts A) Consumer. B) Behavior. C) Choice. D) Status. Show Answer Correct Answer: B) Behavior. 22. What is the tendency to give more weight to information that is easily available? A) Clustering illusion. B) Availability bias. C) Loss aversion. D) Aversion to ambiguity. Show Answer Correct Answer: B) Availability bias. 23. Businesses spend a lot of time and money finding ways to influence your buying decisions A) False. B) True. Show Answer Correct Answer: B) True. 24. Why is behavioral finance important in finance? A) It focuses on the efficient allocation of resources. B) It helps explain market anomalies and investor behavior. C) It emphasizes the use of quantitative models in decision-making. D) None of above. Show Answer Correct Answer: B) It helps explain market anomalies and investor behavior. 25. What is the reliance on stereotypes, analogies, or limited samples to form opinions about an entire class known as? A) Gambler's fallacy. B) Representativeness heuristic. C) Affect heuristic. D) Clustering illusion. Show Answer Correct Answer: B) Representativeness heuristic. 26. Which should we spend our money on FIRST? A) Wants. B) Needs. Show Answer Correct Answer: B) Needs. ← PreviousRelated QuizzesFinance Theory QuizzesFinance QuizzesBehavioral Finance Quiz 1Behavioral Finance Quiz 2Behavioral Finance Quiz 3Behavioral Finance Quiz 4Behavioral Finance Quiz 5Behavioral Finance Quiz 6 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books