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