Ch 2 Flashcards
Sign 6
1 word 2 object 3 gesture 4 tone 5 quality 6 image
Making a decision based on whatever info exists in your memory bank best describes….
Availability heuristic
What are the 3 general schools of thought counseling?
1 Developmental
2 Humanistic
3 Cognitive Behavioral
Identify the school of thought best represented in the statement.
Has its origin in and was influenced by Freudian psychoanalytic theory
Developmental school of thought
Identify the 4 basic premises of traditional finance
1 investors are rational
2 markets are efficient
3 mean variance portfolio theory governs
4 returns are determined by risk
Behavioral finance is premised on 4 basic premises
1 investors are normal
2 markets are inefficient
3 behavioral portfolio theory governs
4 risk alone doesn’t determine returns
Closed question
Answering with short response
Overconfidence bias
Usually concerns an investor that listens mostly to himself
The cognitive bias herding is described as…
Individuals that mimic actions or decisions of a larger group even though the individual may not have necessarily made the same choice
Behavioral finance
Supplements traditional finance with human behavior and psychology
Markets are inefficient is not a principle of…
Modern Portfolio Theory
Identify the school of thought best represented in the statement.
Humans are subject to the same learning principles that were established in animal research
Cognitive behavioral school of thought
A rational investor as described in traditional finance is not affected by…
Bias or emotion
Confirmation bias
Belief or opinion is hard to shake in the future
The developmental paradigm believes that all humans…
Develop and progress in a predictable sequence
Availability heuristic
Decision maker relies on knowledge that is readily available in his memory
Identify the school of thought best represented in the statement.
Defines mental health as having congruent and aligned thoughts, feelings and behaviors…
Humanistic School of Thought
Prospect theory
People value gains and losses differently and base decisions on perceived gains rather than loss
Open question
One that will result in person answering with lengthy response
Human communication
System of signs used in communication process
Traditional Finance
Modern Portfolio Theory
Is it true that is a statement that is a…
Closed question
Advisers should only use open questions during client meetings is…
A false statement
Active listening
Involves response from listener
