FINA 3315 Ch. 9 & 10 Exam Questions with Correct Answers Latest Update 2025/2026
A type of mutual fund with particular appeal to investors who accept the efficient market
hypothesis is...
A. emerging markets fund.
B. asset allocation fund.
C. index fund.
D. growth opportunities fund. - Answers C. index fund.
When the market rate of interest is higher than a bond's coupon rate, the bond will sell at a
discount. (T/F) - Answers True
The process that quickly eliminates price discrepancies in efficient markets is known as
A. arbitration.
B. market correction.
C. random fluctuation.
D. arbitrage. - Answers D. arbitrage.
The tendency of investors to blame others for their failures and take personal credit for their
successes is referred to as...
A. representativeness.
B. loss aversion.
C. narrow framing.
D. self−attribution
bias. - Answers D. self−attribution
bias.
The tendency of naive investors to buy high (after prices have risen for several periods) and sell
low (after prices have dropped for several periods) can be explained by the behavioral tendency
,known as
A. loss aversion.
B. familiarity bias.
C. overconfidence.
D. anchoring. - Answers D. anchoring.
Which of the following are included in technical analysis?
I. charting price movements
II. tracking trading volume
III. determining the investor's risk tolerance
IV. monitoring odd−lot trading
A. I and II only
B. II and III only
C. I, II and III
D. I, II and IV - Answers D. I, II and IV
The odd lot trading indicator assumes that
A. are good market indicators because the actions of small investors tend to confirm bearish or
bullish trends.
B. odd−lot
purchases indicate that high priced stocks like Apple and Berkshire Hathaway are in demand.
C. odd−lot
traders are unsophisticated and time their decisions poorly.
D. odd−lot
traders are sophisticated and tend to buy at low points and sell when stocks are high. - Answers
, C. odd−lot
traders are unsophisticated and time their decisions poorly.
Jason has decided to sell his stock in an energy company because gas and oil prices as well the
price of his stock have declined in 5 of the last 6 months. Jason has most likely fallen into the
trap known as
A. biased self−attribution.
B. loss aversion.
C. narrow framing.
D. representativeness. - Answers D. representativeness.
A cyclical company tends to:
A. have less volatile earnings than the overall market.
B. have earnings that track the overall economy.
C. have a high price-to-earnings ratio. - Answers B. have earnings that track the overall economy.
You hear a market analyst on television say that the advance/decline ratio for the session was
2.7.
What does that mean?
A. For every stock that declined, 2.7 issues advanced. Or put another way, for every 10 stocks
that advanced, 27 declined.
B. For every stock that advanced, 2.7 issues declined. Or put another way, for every 10 stocks
that advanced, 27 declined.
C. For every stock that advanced, 2.7 issues declined. Or put another way, for every 10 stocks
that declined, 27 advanced.
D. For every stock that declined, 2.7 issues advanced. Or put another way, for every 10 stocks
that declined, 27 advanced. - Answers D. For every stock that declined, 2.7 issues advanced. Or
put another way, for every 10 stocks that declined, 27 advanced.
A type of mutual fund with particular appeal to investors who accept the efficient market
hypothesis is...
A. emerging markets fund.
B. asset allocation fund.
C. index fund.
D. growth opportunities fund. - Answers C. index fund.
When the market rate of interest is higher than a bond's coupon rate, the bond will sell at a
discount. (T/F) - Answers True
The process that quickly eliminates price discrepancies in efficient markets is known as
A. arbitration.
B. market correction.
C. random fluctuation.
D. arbitrage. - Answers D. arbitrage.
The tendency of investors to blame others for their failures and take personal credit for their
successes is referred to as...
A. representativeness.
B. loss aversion.
C. narrow framing.
D. self−attribution
bias. - Answers D. self−attribution
bias.
The tendency of naive investors to buy high (after prices have risen for several periods) and sell
low (after prices have dropped for several periods) can be explained by the behavioral tendency
,known as
A. loss aversion.
B. familiarity bias.
C. overconfidence.
D. anchoring. - Answers D. anchoring.
Which of the following are included in technical analysis?
I. charting price movements
II. tracking trading volume
III. determining the investor's risk tolerance
IV. monitoring odd−lot trading
A. I and II only
B. II and III only
C. I, II and III
D. I, II and IV - Answers D. I, II and IV
The odd lot trading indicator assumes that
A. are good market indicators because the actions of small investors tend to confirm bearish or
bullish trends.
B. odd−lot
purchases indicate that high priced stocks like Apple and Berkshire Hathaway are in demand.
C. odd−lot
traders are unsophisticated and time their decisions poorly.
D. odd−lot
traders are sophisticated and tend to buy at low points and sell when stocks are high. - Answers
, C. odd−lot
traders are unsophisticated and time their decisions poorly.
Jason has decided to sell his stock in an energy company because gas and oil prices as well the
price of his stock have declined in 5 of the last 6 months. Jason has most likely fallen into the
trap known as
A. biased self−attribution.
B. loss aversion.
C. narrow framing.
D. representativeness. - Answers D. representativeness.
A cyclical company tends to:
A. have less volatile earnings than the overall market.
B. have earnings that track the overall economy.
C. have a high price-to-earnings ratio. - Answers B. have earnings that track the overall economy.
You hear a market analyst on television say that the advance/decline ratio for the session was
2.7.
What does that mean?
A. For every stock that declined, 2.7 issues advanced. Or put another way, for every 10 stocks
that advanced, 27 declined.
B. For every stock that advanced, 2.7 issues declined. Or put another way, for every 10 stocks
that advanced, 27 declined.
C. For every stock that advanced, 2.7 issues declined. Or put another way, for every 10 stocks
that declined, 27 advanced.
D. For every stock that declined, 2.7 issues advanced. Or put another way, for every 10 stocks
that declined, 27 advanced. - Answers D. For every stock that declined, 2.7 issues advanced. Or
put another way, for every 10 stocks that declined, 27 advanced.
