IFIC Chapter 5 questions well answered
to pass
c - correct answer ✔✔Which of the following is not a theory of standard finance?
a. investors are risk averse
b. investors are rational in their decision making
c. can be risk or risk seeking depending on situation
behavioral biases
cognitive biases
emotional biases - correct answer ✔✔In the investment world, _______ are defined as systematic errors
in financial judgment or imperfections in the perception of economic reality . These fall into 2 categories:
___ & ____
D - correct answer ✔✔Which of the following is FALSE?
a. women are more susceptible to emotional biases
b. men are more overconfident than women
c. women are more likely to buy and hold
d. women are one-third more risk tolerant than men
1. Overconfidence (cognitive)
2. Loss aversion (emotional)
3. Availability bias (cognitive)
4. Cognitive dissonance (cognitive) - correct answer ✔✔List the 4 biases men are susceptible to:
1. Endowment bias (emotional)
2. Status quo bias (emotional)
3. representativeness bias (cognitive)
to pass
c - correct answer ✔✔Which of the following is not a theory of standard finance?
a. investors are risk averse
b. investors are rational in their decision making
c. can be risk or risk seeking depending on situation
behavioral biases
cognitive biases
emotional biases - correct answer ✔✔In the investment world, _______ are defined as systematic errors
in financial judgment or imperfections in the perception of economic reality . These fall into 2 categories:
___ & ____
D - correct answer ✔✔Which of the following is FALSE?
a. women are more susceptible to emotional biases
b. men are more overconfident than women
c. women are more likely to buy and hold
d. women are one-third more risk tolerant than men
1. Overconfidence (cognitive)
2. Loss aversion (emotional)
3. Availability bias (cognitive)
4. Cognitive dissonance (cognitive) - correct answer ✔✔List the 4 biases men are susceptible to:
1. Endowment bias (emotional)
2. Status quo bias (emotional)
3. representativeness bias (cognitive)
