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Based on your learning from the Frogs in the pan theory about the momentum effect, which of the following are correct 1. Frogs in the
Based on your learning from the Frogs in the pan theory about the momentum effect, which of the following are correct 1. Frogs in the pan theory argues that human brain has limits just like frogs that have limited attention capacity. For events that are not salient, humans may ignore them just like frogs. 2. Stocks with slow, small, and continuous movement in prices are more likely to generate stronger future momentum profits. 3. Stocks with fast, large, and discrete movement in prices are more likely to generate stronger future momentum profits. 4. Trades who exploit the frogs in the pan theory are like someone who help the market correct humans' limited attention problem. Therefore, studying how to improve techical trading signals like improving momentum profits by studying the Frogs in the pan theory is not just a traders' own profit maximization problem. Traders' incentive is to make money. But by making money, traders unintentionlly also mitigate limited attention problems like Frogs in the Pan in affecting effcient market price formation process. 1,2 1,2,3 1 1,2,3,4
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