Part 1:

Sam Will is from New Zealand and now he is interested in investing in the Australian equity market. He needs your investment advises since his major is in engineering.

1. What does a put/call ratio imply?
2. What is the difference between a momentum and a contrarian investor?
3. Please select one of the following two strategies by highlighting or circling:

• Momentum
• Contrarian

Based on your selection, if there is currently a high put/call ratio in the market, will Sam treat it as a bearish or a bullish signal? Why?

Part 2:

On 10 March 2020, there were 1,296 stocks advanced on NYSE and 720 declined on NYSE. The volume in advancing issues was 76,030,400 and volume in declining issues was 46,360,000.

1. What was the TRIN ratio for that day?
2. Was it a bullish or bearish signal based on your answer?
3. Did it correctly indicate the market sentiment? Please explain your answer.

Part 3:

Match the following behavioural finance terms with correct the definitions. Terms: Definitions 1. Mental accounting A. Investors may segregate accounts or monies and take risks with their gains that they would not take with their principal 2. Framing bias B. Selling asset quickly to realize a gain when its value has increased, but holding on to losing investment. 3. Disposition Effect C. Investor decision is affected based on the way information is presented. Match the following behavioural finance terms with correct the definitions. Terms: Definitions 1. Mental accounting A. Investors may segregate accounts or monies and take risks with their gains that they would not take with their principal 2. Framing bias B. Selling asset quickly to realize a gain when its value has increased, but holding on to losing investment. 3. Disposition Effect C. Investor decision is affected based on the way information is presented