choose the best answer

Question 1 Standard finance theories presume that investors ____ and behavioural finance presumes that they _________. a) are irrational; are irrational b) are rational; are rational c) are rational; may not be rational d) may not be rational; may not be rational e) may not be rational; are rational

Question 2 The premise of behavioural finance is that a) Standard finance theory considers how emotional people make decisions but the market is driven by rational utility maximising investors. b) Standard finance theory ignores how the average people makes decisions because the market is driven by the investors that are much more sophisticated than the average person. c) Standard finance theory ignores how real people make decisions and that people make a difference. d) A and B e) All of the above

Question 3 Law of one price works when a) market is efficient where the two items are traded. b) market is inefficient where the two items are traded. c) when these two items are identical and fungible. d) when these two items are identical but not fungible. e) none of the above.

Question 4 Below are the several different types of behavior that are evident during bubbles. a) Investors usually exhibit overconfidence, leading to excessive trading b) Underestimating the risk involved. c) Portfolios become concentrated, and investors reject contradictory information. d) a and b e) All of the above 3 Question 5 to Question 1