Result of actions taken by behavioral investors

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Reference no: EM131950422

1. Why would a follower of the Efficient Market Hypothesis (EMH) believe that even if many investors exhibit the behavioral biases discussed in the book, security prices may still be set efficiently?

2. What types of factors might inhibit the ability of rational investors to profit from any “pricing errors” that are a result of actions taken by “behavioral investors”?

3. Do you agree, as do some followers of behavioral finance, that indexing is the ideal investment strategy for most investors?

4. What does “data mining” mean, and why must technical analysts take care not to engage in it?

5. Assume that yesterday the Dow Jones Industrial Average closed up 54 points, and that there were 1,704 issues declining in price while 1,367 issues increased in price. Why would a technical analyst be concerned even though the market index rose for the day?

Reference no: EM131950422

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