QUESTION 1

Four "decision traps " identified by behavioral finance are: A.) overconfidence, unfamiliarity bias, loss aversion. narrow framing B.) lack of confidence, representativeness, overreaction, narrow framing C.) overconfidence, representativeness, loss aversion, narrow framing D.) overconfidence, representativeness, loss aversion, comprehensive framing

Question 2

Early in 2013, Mathew is analyzing shares of Janeff Corp. He expects the following dividends per share (end of year). 2013 $1.00 2014 $1.25 2015 $1.50 He expects 2015 earnings per share to be $4.50 and Janeff's P/E ratio to be 20. His required rate of return for this stock is 12%. He should pay no more than

A.) $68.75 per share B.) $43.75 per share C.) $67.02 per share D.) $93.75 per share

QUESTION 3

Which one of the following combinations best signals a strong market? I. a greater number of advancing stocks than declining stocks II. a greater number of declining stocks than advancing stocks III. a greater volume in rising stocks than in declining stocks IV. a greater volume in declining stocks than in advancing stocks

A.) II and IV B.) II and III C.) I and III D.) I and IV

QUESTION 4

Which one of the following statements is correct?

A.) The market fully anticipates the information contained in an earnings announcement prior to the actual announcement.
	B.	The market responds immediately to reflect the information contained in quarterly earnings reports.
	C.	The weekend effect states that security prices tend to rise between Friday afternoon and Monday morning.
	D.	Low P/E stocks tend to outperform high P/E stocks on a risk-adjusted basis.

QUESTION 5

In the price/earnings approach to stock valuation,

A. historical stock prices are utilized.
B.		forecasted EPS are typically used.
C.		the P/E ratio is computed by multiplying the stock price by the earnings per share.
D.		the market P/E ratio, adjusted by beta, is used to value individual stocks.