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Exam 9: Behavioral Finance and Technical Analysis

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Question 31

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On a particular day, there were 920 stocks that advanced on the NYSE and 723 that declined. The volume in advancing issues was 80,846,000, and the volume in declining issues was 70,397,000. The trin ratio is ________, and technical analysts are likely to be ________.

A) .90; bullish
B) .90; bearish
C) 1.11; bullish
D) 1.11; bearish

E) B) and C)
F) B) and D)

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Question 32

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Which of the following case studies illustrates a limit to arbitrage as discussed in the text?

A) "Siamese twin" companies
B) equity carve-outs
C) closed-end funds
D) all of the options.

E) A) and D)
F) B) and C)

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Question 33

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________ is a tool that can help identify the direction of a stock's price.

Technical analysis focuses on ________.

In 1997 CSX successfully purchased a significant share of Conrail. Immediately after the first offer was announced and the acquisition eventually consummated, the price of CSX fell below preacquisition levels and took many years to recover. This may be an example of ________.

Which of the following analysts focus more on past price movements of a firm's stock than on the underlying determinants of its future profitability?

According to Elliot's wave theory, stock market behavior can be explained as ________.

The tendency of investors to hold on to losing investments is called the ________.

During a period when prices have been rising, the ________ will be ________ the current price.

Trading activity and average returns in brokerage accounts tend to be ________.

The price of a stock fluctuates over a period of 10 days. The movement of the stock price below the 10-day minimum price of $25 triggers a rash of selling. The $25 price might now be considered the ________.

The price of a stock fluctuates between $43 and $60. If the time frame referenced encompasses the primary trend, the $43 price may be considered the ________.

In technical analysis, ________ is a value below which the market is relatively unlikely to fall.

At the beginning of the month, the healthcare index was 134 and the stock market index was 2100. At the end of the month, the healthcare index was 147 and the stock market index was 2214. Consider the ratio of the healthcare index to the market index at the beginning and end of the month. The healthcare index is ________ the market index, and technical analysts who use relative strength would advise ________ the healthcare index.

The confidence index on day 1 is ________.

An investor needs cash to pay some hospital bills. He is willing to use his dividend income to pay the bills, but he will not sell any stock to do so. He is engaging in ________.

Behaviorists point out that even if market prices are ________, there may be ________.

Statman, Fisher, and Anginer (2008) found that stocks ranked high in Fortune's Survey of Most Admired Companies tended to have lower average risk-adjusted returns than the least admired firms. This could be attributed to

A point and figure chart: I. Gives a sell signal when the stock price penetrates previous lows II. Tracks significant upward or downward movements III. Has no time dimension IV. Indicates congestion areas

Conventional finance theory assumes investors are ________, and behavioral finance assumes investors are ________.