205 $
© 2014 Pearson Canada Inc.$7.5 Behavioral Finance
____ is the field of study that applies concepts from social sciences such as psychology
and sociology to help understand the behavior of securities prices.
A) Behavioral finance
B) Strategical finance
C) Methodical finance
D) Procedural finance
Answer: A
Diff: 1 Type: MC Page Ref: 154
Skill: Recall
Objective List: 7.2 Determine how information in the market affects asset prices
If a market participant believes that a stock price is irrationally high, they may try to borrow
stock from brokers to sell in the market and then make a profit by buying the stock back again
after the stock falls in price. This practice is called ____.
A) short selling
B) double dealing
C) undermining
D) long marketing
Answer: A
Diff: 1 Type: MC Page Ref: 154
Skill: Recall
Objective List: 7.2 Determine how information in the market affects asset prices
____ means people are more unhappy when they suffer losses than they are happy when
they achieve gains.
A) Loss fundamentals
B) Loss aversion
C) Loss leader
D) Loss cycle
Answer: B
Diff: 1 Type: MC Page Ref: 154
Skill: Recall
Objective List: 7.2 Determine how information in the market affects asset prices
Loss aversion can explain why very little ____ actually takes place in the securities
market.
A) short selling
B) bargaining
C) bartering
D) negotiating
Answer: A
Diff: 1 Type: MC Page Ref: 154
Skill: Recall
Objective List: 7.2 Determine how information in the market affects asset prices