Reference no: EM131861360

1. A futures contract price is $486 while the current market price of the commodity is $475. This is an example of:

a. a collar.

b. a market cap.

c. intermarket spread.

d. contango.

e. a hedge market.

2. The tendency to attach an unrealistic value to a stock and therefore, hold onto a losing stock in the hope that they will recoup their loss is called:

a. Herding

b. Recency Effect

c. Representative Bias

d. Lost Stock Effect

e. Anchoring

3. Bob is evaluating a mutual fund. He noticed that the “Alpha” of the fund is 5. The fund’s benchmark, the S & P 500, has a return for the year of 10%. What should the return on the mutual fund be?

a. 5%

b. 10.5%

c. 50%

d. 2%

e. 15%

4. The four factors associated with the illusion of control are:

a. choice, active involvement, loss aversion & anchoring

b. choice, active involvement, task familiarity, & information

c. narrow framing, choice, recency & information

d. representative bias, active involvement, task familiarity, & information

e. choice, task familiarity, herding & information

5. According to chartists (technical analysts), a breakout below a support level is:

a. a signal that the market is stagnant.

b. a sell signal.

c. a buy signal for all investors.

d. a signal of market interest.

e. a buy signal for value investors.

6. All of the following are considered risks to investments as discussed in class, except:

a. Interest rate risk

b. Budgeting risk

c. Capital risk

d. Media risk

e. Liquidity risk

7. The tendency to hold a stock too long and avoid selling a stock to avoid any potential loss is called:

a. Narrow Effect

b. Disposition Effect

c. Loss Syndrome

d. Familiarity Bias

e. Herding