Chapter 2: Behavior

Question 1

Basic Developmental

Answer 1

Believes that human development occurs in stages over time.

Question 2

Basic Humanistic

Answer 2

people are good

Question 3

Basic Cognitive

Answer 3

behavior by reinforcement

Question 4

Societal groups use a system of signs in their communication process.

Answer 4

A sign could be a word, object, gesture, tone, quality image, substance, or other references to a shared meaning for communication purposes.

Question 5

Nonverbal cues

Answer 5

body position and body movement are important while voice tone and voice pitch are also telling

Question 6

Active Listening

Answer 6

Requires the listener’s undivided attention. Observe speaker’s body language

Question 7

Reflective Listening

Answer 7

Occurs when the receiver devotes attention to both the content being said and the feelings expressed.

Question 8

Passive Listening

Answer 8

invoked when communication rests entirely on another person and the person receiving the information sits back and listens.

Question 9

Motivational Interviewing

Answer 9

Focuses on overcoming ambivalence to change by guiding the client to (1) express their motivation for change, (2) discover their ability to change, and (3) commit to making the change.

Question 10

Partnership MI

Answer 10

MI is a collaborative partnership

Question 11

Evocation MI

Answer 11

MI draws out the client’s priorities, values, and wisdom to explore reasons for change and support success.

Question 12

Acceptance MI

Answer 12

The MI practitioner is nonjudgmental, seeks to understand the client’s perspectives and experiences, expresses empathy, highlights strengths, and respects a client’s right to make informed choices about changing or not changing

Question 13

Compassion MI

Answer 13

The MI practitioner actively promotes and prioritizes clients’ welfare and wellbeing in a selfless manner

Question 14

Open Question

Answer 14

One that will result in a person answering with a lengthy reponse

Question 15

Closed Question

Answer 15

Seeks a response that is very specific and commonly involves an answer that can be accomplished with a single word or two.

Question 16

Collecting Client Data

Answer 16

The planner must seek to understand the beliefs, attitudes, and desires of the client.

Question 17

Mirroring

Answer 17

Occurs when the planner synchronizes his or her verbal and nonverbal behavior, including body language, gestures, breathing, and language and voice quality, with those of the client. Shows agreement and affirmation.

Question 18

Joining

Answer 18

Making a connection with the client and establishing a trusting relationship

Question 19

Unconditional positive regard

Answer 19

showing respect, acceptance, and understanding the client’s wishes.

Question 20

Integrity

Answer 20

Having strong morals and ethics

Question 21

Traditional Finance has four basic premises

Answer 21

1. Investors are rational
2. Markets are efficient
3. Mean-Variance Portfolio Theory governs
4. Returns are determined by risk

Question 22

Mean-Variance Portfolio Theory

Answer 22

A technique that investors use to make decisions about financial investments, based on the amount of risk that they are willing to accept

Question 23

Behavioral Finance

Answer 23

1. Investors are normal
2. Markets are not efficient
3. The behavioral portfolio theory governs
4. Risk alone does not determine returns

Question 24

What makes investors normal instead of rational?

Answer 24

Cognitive biases, errors, and being human

Question 25

Behavioral Portfolio Theory

Answer 25

The theory is that there are certain behavioral biases that lead investors to make decisions, which in turn leads to lower returns.

Question 26

Anchoring

Answer 26

Attaching, or anchoring, one’s thoughts to a reference point even though there may be no logical relevance or is not relevant to the issue in question.

Question 27

Confirmation Bias

Answer 27

People tend to filter information and focus on information supporting their opinions

Question 28

Affect Heuristic

Answer 28

A heuristic is a tool used in the minds of people, also known as a “rule of thumb"

Question 29

Availability Heuristic

Answer 29

When a decision-maker relies upon the knowledge that is readily available in his or her memory, the cognitive heuristic known as “availability” is invoked

Question 30

Similarity Heuristic

Answer 30

The mind of the individual goes back to a previous situation even if it's not the same.

Question 31

Confirmation Bias

Answer 31

People tend to filter information and focus on information supporting their opinions.

Question 32

Herding

Answer 32

A person’s desire to conform or be accepted by a certain group.

Question 33

Gambler's Fallacy

Answer 33

In the realm of probabilities, misconceptions can lead to faulty predictions as to occurrences of events

Question 34

Recency Bias

Answer 34

Occurs when too much weight is given to recent observations or stimuli versus long-term historical trends

Question 35

Hindsight Bias

Question 36

3 theories used in traditional finance

Answer 36

1. Mean-Variance Theory 2. Modern Portfolio Theory 3. The Capital Asset Pricing Model

Question 37

question 18

Question 38

question 20

Question 39

Prospect Theory

Answer 39

Provides that people value gains and losses differently and will base their decisions on perceived gains rather than perceived losses.

Question 40

The Disposition Effect

Answer 40

The disposition effect is an anomaly discovered in behavioral finance. It relates to the tendency of investors to sell assets that have increased in value while keeping assets that have dropped in value.

Question 41

Stages of Change

Answer 41

1. Pre-Contemplation 2. Contemplation 3. Preparation 4. Action 5. Maintenance

Question 42

Stages Pre-Contemplation

Answer 42

no intent to change

Question 43

Stages Contemplation

Answer 43

Aware that change is needed and considering making change, but not yet ready to take action

Question 44

Stages Preparation

Answer 44

Gathering information in preparation to make a change

Question 45

Stages Action

Answer 45

Action is taken to implement the plan

Question 46

Stages Maintenance

Answer 46

Prevention of relapse

Question 47

Money Belief

Question 48

Four broad categories of money scripts

Answer 48

1. Money avoidance 2. Money worship 3. Money status 4. Money vigilance

Question 49

Money avoidance

Answer 49

Try not to think about money. Believe they do not deserve money

Question 50

Money Worship

Answer 50

Buy things in an effort to create happiness

Question 51

Money Status

Answer 51

Need to keep up the appearance of being successful

Question 52

Money Vigilance

Answer 52

Are alert and watchful in matters concerning their finances

Question 53

Compulsive Buying Disorder

Answer 53

Characterized by excessive preoccupation with shopping and spending that leads to distress.

Question 54

Hoarding

Answer 54

accumulating and being unable to discard possessions that most people would consider worthless.

Question 55

Gambling Disorder

Answer 55

Mental health disorder in which gambling leads to significant impairment and stress

Question 56

Workaholism

Answer 56

A compulsive disorder that is often associated with anxiety or depression.

Question 57

Financial Enabling

Answer 57

Reliance on unearned income from another person. Fear of being cut off.

Question 58

Sources of money conflict

Answer 58

1. Financial Infidelity -knowledge by spouse or partner 2. Saving 3. Spending 4. Priorities 5. Requests for assistance 6. financial enmeshment -when parents involve children in financial decisions

Question 59

Intrinsic Motivation

Answer 59

comes from within and is often associated with satisfaction and enjoyment

Question 60

Extrinsic motivation

Answer 60

comes from an outside reward, you expect to get something in return

Question 61

There are three main psychological needs that determine motivation:

Answer 61

Competence + Relatedness + Autonomy = intrinsic motivation

Question 62

Cognitive Evaluation Theory

Answer 62

A sub-theory of SDT which asserts that social-contextual events such as feedback, communication, and rewards, that are conducive to feelings of competence can enhance intrinsic motivation.