#1
Which theory suggests that markets are not always efficient and can remain irrational for longer periods?
Behavioral Finance Theory
ExplanationMarkets can be irrational for extended periods.
#2
Which of the following is NOT a type of market anomaly?
Disposition Effect
ExplanationDisposition Effect is not a market anomaly.
#3
Which market anomaly suggests that stocks that have performed well in the past will continue to perform well in the future?
Momentum Effect
ExplanationStocks performing well in the past will continue to do so in the future.
#4
What is the 'Disposition Effect' in behavioral finance?
Investors tend to hold onto losing investments for too long and sell winning investments too quickly.
ExplanationHolding onto losses and selling winners quickly.
#5
Which of the following best describes the 'Disposition Effect' in behavioral finance?
Investors tend to hold onto losing investments for too long and sell winning investments too quickly.
ExplanationHolding onto losses and selling winners quickly.
#6
What is the 'Familiarity Bias' in behavioral finance?
Investors prefer to invest in what they know, leading to over-concentration in familiar assets.
ExplanationInvesting in familiar assets due to preference.
#7
What does the 'Anchoring Bias' refer to in behavioral finance?
Investors relying too heavily on initial information when making decisions.
ExplanationRelying heavily on initial information in decision-making.
#8
What is the 'Loss Aversion' phenomenon in behavioral finance?
Investors experiencing more pain from losses than pleasure from gains of the same magnitude.
ExplanationExperiencing more pain from losses than pleasure from equivalent gains.
#9
What is the 'Overreaction Effect' in behavioral finance?
Investors overvalue recent information, causing exaggerated price movements.
ExplanationOvervaluing recent information, leading to exaggerated price movements.
#10
In the context of the 'Prospect Theory,' what is meant by the 'Endowment Effect'?
Investors placing higher value on items they own compared to identical items they do not own.
ExplanationValuing owned items higher than identical non-owned items.
#11
What term describes the irrational behavior of investors who ignore important information and focus only on irrelevant details?
Framing Effect
ExplanationIgnoring important information and focusing on irrelevant details.
#12
What is the concept behind the 'Framing Effect' in behavioral finance?
The way information is presented influences investors' decisions.
ExplanationInformation presentation influencing decisions.