Which of the following statements is not an explanation for asset mispricing that may continue for an extended period of time?

A.
Investors tend to overextrapolate based on assets past returns.

B.
Retail investors may have high quality information that institutional investors have limited access to.

C.
Sophisticated investors may take advantage of mispricing.

D.
Arbitrageurs have limited abilities to correct mispricing.

10 points

QUESTION 2

Which one of the following represents a behavioral challenge that may discourage people from adopting HelloWallet?

A.
People tend to put more weight on short-term satisfaction than on long-term financial well-being.

B.
People typically are not willing to change status quo.

C.
People are not good financial planners.

D.
People value the independence provided by the product.

10 points

QUESTION 3

Which of the following is a manifestation of investors preference for familiarity?

A.
Investor overconfidence

B.
Stock return volatility puzzle

C.
Home bias

D.
Equity premium puzzle

10 points

QUESTION 4

Which of the following is not an example of managers exhibiting behavioral bias?

A.
Overconfident managers tend to make more aggressive investments.

B.
Managers receiving equity based compensation are likely to work harder to increase stock price.

C.
CEOs who grew up during the Great Depression are likely to be more financially conservative.

D.
Sensation seeking managers may be more innovative.

10 points

QUESTION 5

Which of the following does not represent an example of behavioral finance deviating from traditional finance models?

A.
Behavioral finance assumes individuals do not always have rational beliefs.

B.
Behavioral finance acknowledges individuals may face cognitive limits.

C.
Behavioral finance assumes individuals may have preferences that are not consistent with the expected utility theory.

D.
Behavioral finance assumes individuals are self-interested.

10 points

QUESTION 6

Which of the following may be a reason why an average female investor enjoys better performance than an average male investor?

A.
Female investors use more sophisticated trading models.

B.
Female investors trade more frequently.

C.
Female investors tend to trade less.

D.
Female investors tend to be younger.

10 points