Financial Investment Ch 9

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Chapter 09
Behavioral Finance and Technical Analysis
 

Multiple Choice Questions
 

1. Testing many different trading rules until you find one that would have worked in the past is called _______.  A. data mining
B. perceived patterning
C. pattern searching
D. behavioral analysis

 

2. Models of financial markets that emphasize psychological factors affecting investor behavior are called _______.  A. data mining
B. fundamental analysis
C. charting
D. behavioral finance

 

3. The trin statistic is a ______ indicator. 
A. sentiment
B. flow of funds
C. market structure
D. fundamental

 

4. The put/call ratio is a ______ indicator. 
A. sentiment
B. flow of funds
C. market structure
D. fundamental

 

5. Relative strength is a(n) ______ indicator. 
A. fundamental
B. economic
C. technical
D. international

 

6. Short interest is a ______ indicator. 
A. sentiment
B. flow of funds
C. market structure
D. fundamental

 

7. Moving averages are ______ indicators. 
A. sentiment
B. flow of funds
C. trend
D. fundamental

 

8. Market breadth is a ______ indicator. 
A. sentiment
B. flow of funds
C. technical
D. fundamental

 

9. The cumulative tally of the number of advancing stocks minus declining stocks is called the ______________.  A. market breadth
B. market volume
C. trin ratio
D. relative strength ratio

 

10. A high amount of short interest is typically considered as a __________ signal and contrarians may consider it as a _________ signal.  A. bearish; bullish
B. bullish; bearish
C. bearish; false
D. bullish; false

 

11. Technical analysis focuses on _____________________. 
A. finding opportunities for risk-free investing
B. finding repeating trends and patterns in prices
C. changing prospects for earnings growth of particular firms or industries D. forecasting technical regulatory changes

 

12. Behavioralists point out that even if market prices are ____________ there may be _______________.  A. distorted; limited arbitrage opportunities
B. distorted; fundamental efficiency
C. allocationally efficient; limitless arbitrage opportunities D. distorted; allocational efficiency

 

13. According to market technicians it is time to sell stock in a head-and-shoulders formation when ___________.  A. the price index pierces the left shoulder
B. the price index pierces the right shoulder
C. the price index pierces head
D. none of the above takes place.

 

14. The Dow Theory is a technique that attempts to identify ___________________.  A. only long-term trends in stock market prices
B. only short-term trends in stock market prices
C. both long-term and short-term trends in stock market prices D. trends in arbitrage trading opportunities

 

15. According to the Dow Theory there are ______ key forces which simultaneously affect stock prices.  A. 2
B. 3
C. 4
D. 5

 

16. According to the Dow Theory, tertiary trends are _________________.  A. points of trend reversals
B. daily fluctuations which are of little importance
C. short-term deviations from the underlying price trend line D. long-term price movements lasting from months to years

 

17. According to the Dow Theory, secondary trends are _________________.  A. points of trend reversals
B. daily fluctuations which are of little importance
C. short-term deviations from the underlying price trend line D. long-term price movements lasting from months to years

 

18. According to the Dow Theory, primary trends are _________________.  A. points of trend reversals
B. daily fluctuations which are of little importance
C. short-term deviations from the underlying price trend line D. long-term price movements lasting from months to years

 

19. A support level is ___________________. 
A. a level beyond which the market is unlikely to rise
B. a level below which the market is unlikely to fall
C. an equilibrium price level justified by...
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