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Exam 9: Behavioral Finance and Technical Analysis

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Question 41

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The Confidence Index on day one is _____.

A) 0.82
B) 0.89
C) 0.92
D) 1.09

E) None of the above
F) A) and B)

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Question 42

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A possible limit on arbitrage activity that may allow behavioral biases to persist is _______.

A) technical trends in prices
B) momentum effects
C) fundamental risk
D) trend reversals

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

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Question 43

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Which of the following is considered a sentiment indicator?

On a particular day,there were 920 stocks which advanced on the NYSE and 723 which 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 __________.

According to market technicians it is time to sell stock in a head-and-shoulders formation when ___________.

You find that the trin ratio is up,market breadth is down,and the market has closed below its 50-day moving average.In total how many bearish signs do you have?

You find that the confidence index is down,market breadth is up,and the trin ratio is down.In total how many bullish signs do you have?

Conventional finance theory assumes investors are _______ and behavioral finance assumes investors are _______.

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

When the market breaks through the moving average line from below,a technical analyst would probably suggest it is a good time to ___________.

According to technical analysts,a shift in market fundamentals will __________.

On a particular day,there were 890 stocks which advanced on the NYSE and 723 which declined.The volume in advancing issues was 80,846,000 and the volume in declining issues was 70,397,000.The common measure of market breadth is __________.

At the end of July,the average yields on 10 top-rated corporate bonds and 10 intermediate-grade bonds were 7.65% and 8.42% respectively.At the end of August,the average yields on 10 top-rated corporate bonds and 10 intermediate-grade bonds were 6.00% and 6.71% respectively.The confidence index _________ during August and bond technical analysts are likely to be ________.

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 ___________.

Short interest is a ______ indicator.

Relative strength is a(n) ______ indicator.

Jill is offered a choice between receiving $50 with certainty or the proceeds from a gamble.In the gamble a fair coin is tossed and if it comes up heads Jill will receive $100,if the coin comes up tails she will receive nothing.Jill chooses the $50 instead of the gamble.Jill's behavior indicates __________________.

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 ___________.

If investors overweight recent performance in forecasting the future they are exhibiting _______.

The Trin on day two is ___.