Behavioral Finance: Implications For Financial Management

Chapter 22 - Behavioral Finance: Implications for Financial Management
Chapter 22
Behavioral Finance: Implications for Financial Management

Multiple Choice Questions

1. Amy is the chief financial officer of a retail toy store. Recently, she ecie that the firm
sho!l e"pan its operations an open t#o aitional stores. $ithin a very %rief perio, it #as
o%vio!s that Amy ha mae a very %a ecision in opening those stores, given that the
economy is in the mile of a severe recession. In reflecting %ac& on her ecision, Amy
reali'es that she mae a %a ecision !e to a reasoning error. $hich one of the follo#ing
areas of st!y %est applies to this sit!ation(
A. corporate ethics
B. financial statement analysis
C. managerial finance
). e%t management
*. %ehavioral finance

2. +eter has s!ccessf!lly manage the finances of A.). ,ea%etter in a manner that has
yiele a%normally high ret!rns. )!e to this s!ccess, +eter has ecie to p!%lish a ne#sletter
for financial e"ec!tives so that he can share his s!perior financial #isom #ith others. -here
is a very real pro%a%ility that +eter has #hich one of the follo#ing characteristics(
A. gam%ler.s fallacy
B. frame epenence
C. overconfience
). representativeness he!ristic
*. sentiment-%ase ris& attit!es

/. Anytime -e analy'es a propose pro0ect, he al#ays assigns a m!ch higher pro%a%ility of
s!ccess to the pro0ect than is #arrante %y the information he has gathere. -e s!ffers from
#hich one of the follo#ing(
A. frame epenence
B. overconfience
C. gam%ler.s fallacy
). confirmation %ias
*. overoptimism

22-1
1. -he tenency for a ecision ma&er to search for confirmation that a recent ecision he or
she mae #as a goo ecision represents #hich one of the follo#ing characteristics(
A. overconfience
B. overoptimism
C. affect he!ristic
*. representativeness he!ristic

2. $hich one of the follo#ing refers to the fact that an inivi!al may reply ifferently if a
3!estion is as&e in a ifferent manner(
A. loss aversion
B. gam%ler.s fallacy
C. frame epenence
). overconfience
*. format reference

4. A general r!le !se as the %asis for ecision ma&ing is referre to as:
A. a loss aversion techni3!e.
B. he!ristics.
C. self-attri%!tion.
). narro# framing
*. confirmation %ias

5. Bill feels that he possesses a goo ose of 6street smarts6. -h!s, he ma&es his %!siness
ecisions %ase on ho# a pro0ect feels to him rather than ta&ing the time to financially
analy'e a pro0ect. -his type of %ehavior is referre to as:
A. overconfience.
B. eno#ment effect.
C. money ill!sion.
). affect he!ristic.
*. sentiment-%ase ris&.

22-2
7. 8l Co!ntry +ro!ctions re3!ires s&ille f!rnit!re finishers to p!t the final to!ches on all
of the f!rnit!re it pro!ces. -he firm hire t#o inivi!als last year #ho ha %een st!ents in
Mr. -e#ell.s #oo shop class in high school. Both of these employees have emonstrate
e"ceptional s&ills an have alreay %een promote to senior finishing positions. -he firm
c!rrently has an opening for one aitional finisher. -om, the hea of the finishing section,
has stip!late that he only #ants to intervie# caniates #ho have complete Mr. -e#ell.s
co!rse. -om.s %ehavior is typical of someone #ho has #hich one of the follo#ing
characteristic %ehavio!rs(
A. eno#ment effect
B. framing effect
C. representativeness he!ristic
). narro# framing
*. affect he!ristic

9. In an efficient mar&et, it is %elieve %y some inivi!als that the actions of traers #ho
constantly %!y an sell on any perceive mar&et mispricings #ill in effect ca!se mar&et prices
to correctly reflect asset val!es. A person #ho %elieves that the actions of these traers #ill
not res!lt in correctly val!e prices are most apt to %elieve in #hich one of the follo#ing(
B. limits to ar%itrage
C. availa%ility %ias
). false consens!s
*. cl!stering ill!sion

1:. ;te#art is a fello# finance st!ent at yo!r school #ho is aicte to ay traing an th!s
%!ys an sells stoc&s %et#een classes an over his l!nch %rea&. <e never has time to really
analy'e a sec!rity so 0!st traes the stoc& sym%ols that other investors appear to %e traing.
;te#art is #hich one of the follo#ing(
A. noise traer
B. ar%itrage!r
C. crasher
). regret averter
*. myopic loss averter

22-/
11. $hich one of the follo#ing is an investment ris& that investors face in aition to firm-
%ase ris& an mar&et-%ase ris&(
A. management-relate ris&
B. inflation ris&
C. s!pply chain ris&
). interest rate ris&
*. sentiment-%ase ris&

12. Most people #o!l ten to agree that technology stoc&s #ere highly overval!e in the late
199:.s. -his time perio is %est escri%e as a technology:
A. crash.
B. circle.
C. %!%%le.
). limit.
*. ar%itrage.

1/. A s!en an severe ecline in mar&et prices is %est escri%e as a mar&et:
A. crash.
B. revolver.
C. %!%%le.
). limit.
*. mispricing.

11. $hich one of the follo#ing %est ill!strates an error #hich yo!, as a manager, might ma&e
!e to overconfience(
A. overestimating the %est o!tcome e"pecte from a pro0ect #hile !nerestimating the
possi%ility of a less favora%le o!tcome
B. ass!ming that a ne# pro0ect #ill %e profita%le since similar pro0ects in the past #ere
s!ccessf!l
C. ass!ming that yo!r e"pectations of the f!t!re o!tcome from a pro0ect are more acc!rate
than the e"pectations of others #ithin yo!r organi'ation
). listening to the avice of s!%orinates #ith #hom yo! agree #hile ignoring the avice of
s!%orinates #ith #hom yo! ten to isagree
*. o#nplaying the cost of f!t!re fail!re of an e"isting pro0ect since the pro0ect has alreay
pai for itself

22-1
12. Ass!me yo! are an overconfient manager. =o! are most apt to o #hich one of the
follo#ing more so than yo! #o!l if yo! #ere not overconfient(
A. research a pro0ect more thoro!ghly %efore committing f!ns to commence it
B. accept ris&y pro0ects that t!rn o!t to %e less profita%le than yo! e"pecte
C. #ait !ntil ne# technology proves its #orth %efore incorporating it into yo!r firm.s
operations
). avoi mergers an ac3!isitions
*. invest e"cess company cash more conservatively than yo!r peers at other firms

14. Mar'ella Corp. is analy'ing a pro0ect that involves e"paning the firm into a ne# pro!ct
line. -he pro0ect incl!es the constr!ction of a ne# man!fact!ring facility an also creating a
ne# istri%!tion system. -he pro0ect.s financial pro0ections #ill ten to have #hich one of the
follo#ing characteristics if the person compiling those pro0ections s!ffers from
overoptimism(
A. over estimate constr!ction costs
B. over estimate e"penses
C. over estimate net present val!es
). !ner estimate profits
*. !ner estimate sales estimates

15. $hen #eighing a ecision, >ate places greater emphasis on opinions that match her o#n
than she oes on opinions offere %y others that isagree #ith her personal point of vie#.
>ate ill!strates #hich one of the follo#ing(
A. frame epenence
B. overconfience
*. overoptimism

22-2
17. >aiser Mar&eting recently con!cte a s!rvey on %ehalf of <ealth +ro!cts. -he primary
p!rpose of the s!rvey #as to ill!strate to <ealth +ro!cts that it #as relying on res!lts of
previo!s st!ies that, accoring to >aiser, #ere !nrelia%le !e to the #oring of the s!rvey
3!estions. -o prove this point, >aiser con!cte a t#o-prong s!rvey. In the first prong, the
s!rvey 3!estions #ere #ore s!ch that the ans#ers tene to so!n positive. In the secon
prong, the s!rvey 3!estions #ere re-#ore s!ch that the ans#ers tene to convey a negative
feeling. Both sets of s!rvey 3!estions sho!l have res!lte in similar res!lts as the
information solicite #as essentially ientical. <o#ever, the s!rvey res!lts varie
significantly. -his s!rvey %est ill!strates #hich one of the follo#ing(
A. mental acco!nting
B. overconfience
C. self attri%!tion %ias
*. frame epenence

19. Recently, a neigh%or yo! have &no#n for years #on a lottery an receive a ?22:,:::
pri'e. -his neigh%or ecie to invest all of his #innings in a ne# %!siness vent!re that he
&ne# only ha a five percent chance of s!ccess. +revio!s to this, the neigh%or ha al#ays
%een !ltra conservative #ith his money an ha ref!se to invest in this %!siness vent!re as
recently as last #ee&. $hich one of the follo#ing %ehaviors most applies to yo!r neigh%or.s
ecision to invest in this %!siness vent!re no#(
A. overoptimisim
B. affect he!ristic
C. loss aversion
). ho!se money
*. get-evenitis

2:. Amy has %een investing in stoc&s so she can acc!m!late s!fficient money to p!rchase her
o#n home. -hese savings are c!rrently val!e at ?72,2::. As recently as last month, her
savings #ere #orth in e"cess of ?11:,:::. -oay, Amy fo!n the perfect ho!se. ;he &no#s
she can #ithra# her savings to pay on this ho!se an %orro# the remaining %alance from her
father at 'ero percent interest. <o#ever, Amy is ref!sing no# to %!y any ho!se !ntil her
savings increase in val!e %ac& to their ?11:,::: previo!s val!ation. Amy is isplaying #hich
one of the follo#ing %ehaviors(
A. representativeness he!ristic
B. loss aversion
C. ho!se money effect
). !nerconfience

22-4
21. ;teve p!rchase a stoc& last year for ?/1 a share. -he stoc& increase in val!e to ?/4 a
share %efore eclining to its c!rrent val!e of ?/:. ;teve has ecie to sell the stoc& %!t only
if he can receive ?/1 a share or %etter. ;teve is s!ffering most from #hich one of the
follo#ing %ehavioral conitions(
B. ho!se money
C. get-evenitis
). ranomness
*. ar%itrage reaction

22. Mi&e is a stoc& %ro&er an financial planner. +hil is one of Mi&e.s clients. +hil prefers to
meet #ith Mi&e 0!st once a year to revie# his investment portfolio. At their most recent
meeting, +hil state he %elieves the stoc& mar&et is going to ecline in val!e over the ne"t si"
months. -h!s, +hil instr!cte Mi&e to sell every stoc& he o#ns that is c!rrently #orth more
than #hat he pai to p!rchase it. +hil also instr!cte Mi&e to retain any stoc& that #o!l
create a capital loss if sol. +hil is isplaying the %ehavior &no#n as:
A. overconfience.
B. ar%itrage theory.
C. the isposition effect.
). the ho!se money effect.
*. a confirmation %ias.

2/. 8ver the past si" months, yo! have #atche as yo!r parent.s retirement savings have
ecline in val!e %y 12 percent !e to a severe financial mar&et o#nt!rn. As a res!lt, yo!
have ecie that yo! #ill never invest in stoc&s for yo!r o#n retirement %!t #ill instea
&eep all of yo!r money in an ins!re %an& acco!nt. $hich %ehavior characteristic have yo!
evelope as a res!lt of the mar&et o#nt!rn(
A. myopic loss aversion
B. get-evenitis
C. self-attri%!tion %ias
). mental acco!nting
*. regret aversion

22-5
21. Ramon opene a com%ination la!nry an ry cleaning esta%lishment three years ago.
)!e to his e"cellent service an reasona%le prices, his %!siness has gro#n an is oing 3!ite
#ell financially. <e has consiere e"paning this %!siness %y opening another location %!t
&eeps p!tting off that ecision for fear that the secon location #ill not %e a s!ccess. Ramon
is c!rrently isplaying #hich one of the follo#ing %ehavior characteristics(
A. self-attri%!tion %ias
B. overconfience
C. regret aversion
). ho!se money effect
*. frame epenence

22. +hyllis is planning for her retirement in fifteen years. ;he &no#s that she can c!rrently
live reasona%ly #ell on ?/7,::: a year given that she is e%t-free. Base on her family history
she e"pects to ie ten years after she retires. -h!s, she comp!tes her retirement nee as
?/7,::: a year for 1: years. $hich one of the follo#ing %ehaviors applies to +hyllis(
A. regret aversion
B. money ill!sion
). eno#ment effect
*. myopic loss aversion

24. >ate is attempting to sell her ho!se for ?24:,:::. Fre lives across the street in an
ientical ho!se. Fre recently state to his #ife that >ate.s ho!se is pro%a%ly #orth only
?22:,::: %!t that once she sells her ho!se, he #o!l li&e to p!t their ho!se on the mar&et at
?272,::: an then move into a conomini!m. $hich one of the follo#ing %ehaviors applies
to Fre(
B. ho!se money effect
C. money ill!sion
). self-attri%!tion %ias
*. eno#ment effect

22-7
25. =o! recently overhear yo!r %oss telling someone that if he. act!ally cr!nche some
n!m%ers an one some analysis instea of 0!st going #ith his instincts that he never #o!l
have opene the ne# store in Centre City. $hich one of the follo#ing ca!se yo!r %oss to
ma&e a %a ecision(
A. regret aversion
B. eno#ment effect
C. money ill!sion
). affect he!ristic

27. Roger.s Meat Mar&et is a chain of retail stores that limits its sales to fresh-c!t meats. -he
stores have %een very profita%le in northern cities. <o#ever, #hen t#o stores #ere opene in
the so!th, %oth lost money an ha to %e close. Roger, the o#ner, has no# concl!e that no
so!thern-%ase store sho!l %e opene as it #o!l not %e profita%le. $hich one of the
follo#ing applies to Roger(
A. confirmation %ias
B. eno#ment effect
C. money ill!sion
). affect he!ristic

29. @p !ntil three years ago, A.C. )ime opene an average of ten ne# retail stores a year. 8ne
of those stores ha to %e close #ithin t#o years !e to poor sales. -his 9: percent s!ccess
ratio #as fairly steay for over /: years. ;tarting three years ago, the firm has opene 1: ne#
stores an every one ha significant profits #ithin 4 months. Management %elieves their
recent s!ccess is not 0!st a ranom event an that all f!t!re stores #ill %e profita%le. -h!s, the
managers have ecie to open a minim!m of 12 ne# stores each year. -he managers are
s!ffering from:
A. ar%itrage limitations.
B. anchoring an a0!stment.
C. aversion to am%ig!ity.
). the cl!stering ill!sion.
*. myopic aversion.

22-9
/:. =o! are employe as a commission-%ase sales cler& for a cosmetics retail store. =o!
&no# that on average, e"actly 2: percent of the c!stomers that enter yo!r store #ill ma&e at
least one p!rchase. -h!s far this morning, yo! have #aite on eight c!stomers #itho!t
ma&ing a single sale. =o! are convince that the ne"t c!stomer yo! #ait on #ill %!y
something. -his %elief is &no#n as:
A. aversion to am%ig!ity.
B. the la# of small n!m%ers.
C. anchoring an a0!sting.
). gam%ler.s fallacy.
*. false consens!s.

/1. =o! on.t partic!larly li&e to shop so only go to the mall once a month. -o help ma&e the
tre& more en0oya%le, yo! al#ays have l!nch at the resta!rant locate insie the mall. ;ince
yo! are s!ch a creat!re of ha%it, yo! al#ays orer the same meal. =o!.ve notice that the price
of that meal has increase every time yo! have %een there over the past si" months. -h!s, yo!
e"pect the meal to increase in price ne"t month. -his is an e"ample of #hich one of the
follo#ing(
A. recency %ias
B. anchoring an a0!stment
C. frame epenence
). aversion to am%ig!ity

/2. =o! starte an online %!siness three #ee&s ago. -h!s far, yo! have average 1: sales a
ay, #hich is one sale for every five hits. =o! are no# consiering giving !p yo!r ay 0o% an
%ecoming a f!ll-time online retailer. =o! have calc!late the amo!nt of income yo! can earn
%ase on 1: sales a ay an &no# that level of income #o!l s!pport yo! in a comforta%le
fashion. -he %elief that yo! #ill have 1: sales per ay on average if this %ecomes yo!r f!ll-
time occ!pation is %ase on #hich one of the follo#ing(
C. la# of small n!m%ers
). %!%%le an crash theory

22-1:
//. =o! are a har-charging manager #ho oesn.t really li&e to sit at a es& for too long. =o!
prefer to gather information 3!ic&ly, ma&e a ecision, an move on to the ne"t item on yo!r
agena. $hich one of the follo#ing applies to yo!(
A. availa%ility %ias
B. ar%itrage limits
*. regret aversion

/1. =o! have save a total of ?2::,::: over the past several years. Aane, a tr!ste %!siness
associate, recently approache yo! #ith an offer. ;he has offere yo! a partnership in a ne#
firm that she e"pects to %e e"ceeingly profita%le. =o!r initial investment in the partnership
#o!l %e ?122,:::. <o#ever, Aane cannot give yo! any os on that s!ccess occ!rring. =o!
have ecie to &eep yo!r ?122,::: an forego this opport!nity simply %eca!se yo! on.t
&no# the pro%a%ility of s!ccess. $hich one of the follo#ing %ehavior characteristics o yo!
have(
A. aversion to am%ig!ity
B. recency %ias
C. sentiment-%ase ris& aversion
). cl!stering ill!sion
*. money ill!sion

/2. =o! are the manager of a retail store. =o! %elieve the economy is in a recession an that
sales for the month #ill %e !n!s!ally slo#. ;ince yo! have complete iscretion over the
pricing at yo!r location, yo! ecie to have a store-#ie sale an offer 1: percent off all
merchanise for a /-ay perio. =o! on.t e"pect yo!r s!periors to critici'e this ecision as
yo! %elieve they, along #ith the ma0ority of the other store managers, feel the same #ay a%o!t
the economy as yo! o. $hich one of the follo#ing applies to yo!(
A. recency %ias
B. la# of small n!m%ers
). false consens!s
*. money ill!sion

22-11
/4. $hich of the follo#ing create limits to ar%itrage(
I. ris&s relate to an inivi!al firm
II. implementation costs
III. rational traers
IB. noise traers
A. I an III only
B. II an IB only
C. I, II, an III only
). I, II, an IB only
*. I, II, III, an IB

/5. AB In!stries is an all-e3!ity firm that has ?7 per share in cash an a %oo& val!e per share
of ?12. At #hich one of the follo#ing mar&et prices #o!l yo! &no# #ith a%sol!te certainty
that the stoc& #as misprice(
A. ?5
B. ?7
C. ?1:
). ?12
*. ?1/

/7. $hich of the follo#ing have %een offere as factors contri%!ting to the mar&et crash of
1975(
I. re3!irement for only a 1: percent cash payment to p!rchase a stoc&
II. program traing
III. irrational investors
IB. preceeing %ear mar&et
A. I an III only
B. I an IB only
C. II an III only
). I, II, an III only
*. I, II, an IB only

22-12
/9. $hich one of the follo#ing statements relate to mar&et crashes is correct(
A. Financial mar&et crashes are !ni3!e to the @nite ;tates.
B. A severe mar&et ecline tens to occ!r over a m!lti-ay perio.
C. 8nce the mar&et finally crashe in 1929, stoc& prices %egan to slo#ly increase again.
). -he mar&et crash of 1975 occ!rre on a ay #hen traing vol!me #as light inicating
there #ere a limite n!m%er of irrational investors involve.
*. Actions in $ashington, ).C. may have helpe contri%!te to the mar&et crash in 1929 %!t
not to the 1975 crash.

1:. $hich one of the follo#ing statements is tr!e(
A. Mar&et crashes ten to %e accompanie %y lo# mar&et vol!me.
B. -he Asian mar&et crash #as follo#e %y a 3!ic& recovery.
C. -he mar&et crash of 1929 an the crash of 1975 are very similar in %oth the percentage
ecline in mar&et val!e an in the ens!ing mar&et recovery.
). Mar&et crashes ten to follo# mar&et %!%%les.
*. Mar&et %!%%les an crashes prove that financial mar&ets are inefficient.

11. <istorical ret!rns s!pport #hich one of the follo#ing statements(
A. Financial mar&ets are highly inefficient as s!ggeste %y %ehavioral finance.
B. +rofessional money managers ten to o!tperform the Bang!ar 2:: ine" f!n a%o!t 22
percent of the time on average.
C. -he longer the time span, the more apt a professional money manager is to o!tperform an
ine" f!n, s!ch as the ;C+ 2::.
). <istorical ata s!pports the statement that ar%itrage is !nlimite an res!lts in a totally
efficient mar&et.
*. -he financial mar&ets appear to %e efficient %eca!se, on average, they o!tperform
professional money managers.

22-1/
12. $hich of the follo#ing statements are correct(
I. Many professional f!n managers are pai #ell %!t fail to o!tperform as e"pecte.
II. +rofessional f!n managers that have ten!res in e"cess of ten years, ten to consistently
o!tperform the mar&et on a long-term %asis.
III. If a mar&et is tr!ly efficient, then all investments in that mar&et are 'ero net present val!e
opport!nities.
IB. Actively managing a f!n appears to %e the &ey to o!tperforming the mar&et.
A. I an III only
B. II an IB only
C. II an III only

Essay Questions

1/. +rovie an e"ample of a managerial ecision that ill!strates each one of the follo#ing
%ehaviors:
Behavior: 8verconfience
*"ample:
Behavior: Affect he!ristic
*"ample:
Behavior: ,oss aversion
*"ample:

22-11
11. *"plain 1D the concept of ho!se money, 2D #hy the ho!se money concept is s!ch a
common %ehavior for so many inivi!als an /D #hy ho!se money is an irrational %ehavior.

12. *"plain #hy a lo#-price, lo# traing vol!me stoc& is more apt to present limits to
ar%itrage than is a high-price, high traing vol!me stoc&.

22-12
Chapter 22 Behavioral Finance: Implications for Financial Management Ans#er
>ey

Multiple Choice Questions

1. Amy is the chief financial officer of a retail toy store. Recently, she ecie that the firm
sho!l e"pan its operations an open t#o aitional stores. $ithin a very %rief perio, it #as
o%vio!s that Amy ha mae a very %a ecision in opening those stores, given that the
economy is in the mile of a severe recession. In reflecting %ac& on her ecision, Amy
reali'es that she mae a %a ecision !e to a reasoning error. $hich one of the follo#ing
areas of st!y %est applies to this sit!ation(
A. corporate ethics
B. financial statement analysis
C. managerial finance
). e%t management
E. %ehavioral finance
Refer to section 22.1

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Learning Obecti!e: ""#$
Section: ""%$
&o'ic: Be(a!ioral finance

22-14
2. +eter has s!ccessf!lly manage the finances of A.). ,ea%etter in a manner that has
yiele a%normally high ret!rns. )!e to this s!ccess, +eter has ecie to p!%lish a ne#sletter
for financial e"ec!tives so that he can share his s!perior financial #isom #ith others. -here
is a very real pro%a%ility that +eter has #hich one of the follo#ing characteristics(
B. frame epenence
C. overconfience
*. sentiment-%ase ris& attit!es

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%"
&o'ic: O!erconfidence

/. Anytime -e analy'es a propose pro0ect, he al#ays assigns a m!ch higher pro%a%ility of
s!ccess to the pro0ect than is #arrante %y the information he has gathere. -e s!ffers from
#hich one of the follo#ing(
A. frame epenence
B. overconfience
E. overoptimism

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%"
&o'ic: O!ero'timism

22-15
1. -he tenency for a ecision ma&er to search for confirmation that a recent ecision he or
she mae #as a goo ecision represents #hich one of the follo#ing characteristics(
A. overconfience
B. overoptimism
C. affect he!ristic
D. confirmation %ias

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%"
&o'ic: Confirmation bias

2. $hich one of the follo#ing refers to the fact that an inivi!al may reply ifferently if a
3!estion is as&e in a ifferent manner(
A. loss aversion
B. gam%ler.s fallacy
C. frame epenence
). overconfience
*. format reference
Refer to section 22./

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Learning Obecti!e: ""#"
Section: ""%)
&o'ic: *rame de'endence

22-17
4. A general r!le !se as the %asis for ecision ma&ing is referre to as:
A. a loss aversion techni3!e.
B. he!ristics.
C. self-attri%!tion.
). narro# framing

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Learning Obecti!e: ""#)
Section: ""%+
&o'ic: ,euristics

5. Bill feels that he possesses a goo ose of 6street smarts6. -h!s, he ma&es his %!siness
ecisions %ase on ho# a pro0ect feels to him rather than ta&ing the time to financially
analy'e a pro0ect. -his type of %ehavior is referre to as:
A. overconfience.
B. eno#ment effect.
C. money ill!sion.
D. affect he!ristic.
*. sentiment-%ase ris&.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%+
&o'ic: Affect (euristic

22-19
7. 8l Co!ntry +ro!ctions re3!ires s&ille f!rnit!re finishers to p!t the final to!ches on all
of the f!rnit!re it pro!ces. -he firm hire t#o inivi!als last year #ho ha %een st!ents in
Mr. -e#ell.s #oo shop class in high school. Both of these employees have emonstrate
e"ceptional s&ills an have alreay %een promote to senior finishing positions. -he firm
c!rrently has an opening for one aitional finisher. -om, the hea of the finishing section,
has stip!late that he only #ants to intervie# caniates #ho have complete Mr. -e#ell.s
co!rse. -om.s %ehavior is typical of someone #ho has #hich one of the follo#ing
characteristic %ehavio!rs(
A. eno#ment effect
B. framing effect
C. representativeness he!ristic
). narro# framing
*. affect he!ristic

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%+
&o'ic: -e'resentati!eness (euristic

9. In an efficient mar&et, it is %elieve %y some inivi!als that the actions of traers #ho
constantly %!y an sell on any perceive mar&et mispricings #ill in effect ca!se mar&et prices
to correctly reflect asset val!es. A person #ho %elieves that the actions of these traers #ill
not res!lt in correctly val!e prices are most apt to %elieve in #hich one of the follo#ing(
B. limits to ar%itrage
C. availa%ility %ias
). false consens!s

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Learning Obecti!e: ""#+
Section: ""%.
&o'ic: Limits to arbitrage

22-2:
1:. ;te#art is a fello# finance st!ent at yo!r school #ho is aicte to ay traing an th!s
%!ys an sells stoc&s %et#een classes an over his l!nch %rea&. <e never has time to really
analy'e a sec!rity so 0!st traes the stoc& sym%ols that other investors appear to %e traing.
;te#art is #hich one of the follo#ing(
A. noise traer
B. ar%itrage!r
C. crasher
). regret averter
*. myopic loss averter

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: Noise trader

11. $hich one of the follo#ing is an investment ris& that investors face in aition to firm-
%ase ris& an mar&et-%ase ris&(
A. management-relate ris&
B. inflation ris&
C. s!pply chain ris&
). interest rate ris&
E. sentiment-%ase ris&

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: Sentiment#based ris/

22-21
12. Most people #o!l ten to agree that technology stoc&s #ere highly overval!e in the late
199:.s. -his time perio is %est escri%e as a technology:
A. crash.
B. circle.
C. %!%%le.
). limit.
*. ar%itrage.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: Bubble

1/. A s!en an severe ecline in mar&et prices is %est escri%e as a mar&et:
A. crash.
B. revolver.
C. %!%%le.
). limit.
*. mispricing.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: Cras(

22-22
11. $hich one of the follo#ing %est ill!strates an error #hich yo!, as a manager, might ma&e
!e to overconfience(
A. overestimating the %est o!tcome e"pecte from a pro0ect #hile !nerestimating the
possi%ility of a less favora%le o!tcome
B. ass!ming that a ne# pro0ect #ill %e profita%le since similar pro0ects in the past #ere
s!ccessf!l
C. ass!ming that yo!r e"pectations of the f!t!re o!tcome from a pro0ect are more acc!rate
than the e"pectations of others #ithin yo!r organi'ation
). listening to the avice of s!%orinates #ith #hom yo! agree #hile ignoring the avice of
s!%orinates #ith #hom yo! ten to isagree
*. o#nplaying the cost of f!t!re fail!re of an e"isting pro0ect since the pro0ect has alreay
pai for itself

AACSB: N/A
Bloom's: Com're(ension
Difficulty: Basic
Section: ""%"

12. Ass!me yo! are an overconfient manager. =o! are most apt to o #hich one of the
follo#ing more so than yo! #o!l if yo! #ere not overconfient(
A. research a pro0ect more thoro!ghly %efore committing f!ns to commence it
B. accept ris&y pro0ects that t!rn o!t to %e less profita%le than yo! e"pecte
C. #ait !ntil ne# technology proves its #orth %efore incorporating it into yo!r firm.s
operations
). avoi mergers an ac3!isitions
*. invest e"cess company cash more conservatively than yo!r peers at other firms

AACSB: N/A
Difficulty: Basic
Section: ""%"

22-2/
14. Mar'ella Corp. is analy'ing a pro0ect that involves e"paning the firm into a ne# pro!ct
line. -he pro0ect incl!es the constr!ction of a ne# man!fact!ring facility an also creating a
ne# istri%!tion system. -he pro0ect.s financial pro0ections #ill ten to have #hich one of the
follo#ing characteristics if the person compiling those pro0ections s!ffers from
overoptimism(
A. over estimate constr!ction costs
B. over estimate e"penses
C. over estimate net present val!es
). !ner estimate profits
*. !ner estimate sales estimates

AACSB: N/A
Difficulty: Basic
Section: ""%"
&o'ic: O!ero'timism

15. $hen #eighing a ecision, >ate places greater emphasis on opinions that match her o#n
than she oes on opinions offere %y others that isagree #ith her personal point of vie#.
>ate ill!strates #hich one of the follo#ing(
A. frame epenence
B. overconfience
D. confirmation %ias
*. overoptimism

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%"
&o'ic: Confirmation bias

22-21
17. >aiser Mar&eting recently con!cte a s!rvey on %ehalf of <ealth +ro!cts. -he primary
p!rpose of the s!rvey #as to ill!strate to <ealth +ro!cts that it #as relying on res!lts of
previo!s st!ies that, accoring to >aiser, #ere !nrelia%le !e to the #oring of the s!rvey
3!estions. -o prove this point, >aiser con!cte a t#o-prong s!rvey. In the first prong, the
s!rvey 3!estions #ere #ore s!ch that the ans#ers tene to so!n positive. In the secon
prong, the s!rvey 3!estions #ere re-#ore s!ch that the ans#ers tene to convey a negative
feeling. Both sets of s!rvey 3!estions sho!l have res!lte in similar res!lts as the
information solicite #as essentially ientical. <o#ever, the s!rvey res!lts varie
significantly. -his s!rvey %est ill!strates #hich one of the follo#ing(
B. overconfience
C. self attri%!tion %ias
E. frame epenence

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: *rame de'endence

19. Recently, a neigh%or yo! have &no#n for years #on a lottery an receive a ?22:,:::
pri'e. -his neigh%or ecie to invest all of his #innings in a ne# %!siness vent!re that he
&ne# only ha a five percent chance of s!ccess. +revio!s to this, the neigh%or ha al#ays
%een !ltra conservative #ith his money an ha ref!se to invest in this %!siness vent!re as
recently as last #ee&. $hich one of the follo#ing %ehaviors most applies to yo!r neigh%or.s
ecision to invest in this %!siness vent!re no#(
A. overoptimisim
B. affect he!ristic
C. loss aversion
D. ho!se money
*. get-evenitis

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: ,ouse money

22-22
2:. Amy has %een investing in stoc&s so she can acc!m!late s!fficient money to p!rchase her
o#n home. -hese savings are c!rrently val!e at ?72,2::. As recently as last month, her
savings #ere #orth in e"cess of ?11:,:::. -oay, Amy fo!n the perfect ho!se. ;he &no#s
she can #ithra# her savings to pay on this ho!se an %orro# the remaining %alance from her
father at 'ero percent interest. <o#ever, Amy is ref!sing no# to %!y any ho!se !ntil her
savings increase in val!e %ac& to their ?11:,::: previo!s val!ation. Amy is isplaying #hich
one of the follo#ing %ehaviors(
B. loss aversion
C. ho!se money effect
). !nerconfience

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: Loss a!ersion

21. ;teve p!rchase a stoc& last year for ?/1 a share. -he stoc& increase in val!e to ?/4 a
share %efore eclining to its c!rrent val!e of ?/:. ;teve has ecie to sell the stoc& %!t only
if he can receive ?/1 a share or %etter. ;teve is s!ffering most from #hich one of the
follo#ing %ehavioral conitions(
B. ho!se money
C. get-evenitis
). ranomness
*. ar%itrage reaction

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: Loss a!ersion0 get#e!enitis

22-24
22. Mi&e is a stoc& %ro&er an financial planner. +hil is one of Mi&e.s clients. +hil prefers to
meet #ith Mi&e 0!st once a year to revie# his investment portfolio. At their most recent
meeting, +hil state he %elieves the stoc& mar&et is going to ecline in val!e over the ne"t si"
months. -h!s, +hil instr!cte Mi&e to sell every stoc& he o#ns that is c!rrently #orth more
than #hat he pai to p!rchase it. +hil also instr!cte Mi&e to retain any stoc& that #o!l
create a capital loss if sol. +hil is isplaying the %ehavior &no#n as:
A. overconfience.
B. ar%itrage theory.
C. the isposition effect.
). the ho!se money effect.
*. a confirmation %ias.

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: Dis'osition effect

2/. 8ver the past si" months, yo! have #atche as yo!r parent.s retirement savings have
ecline in val!e %y 12 percent !e to a severe financial mar&et o#nt!rn. As a res!lt, yo!
have ecie that yo! #ill never invest in stoc&s for yo!r o#n retirement %!t #ill instea
&eep all of yo!r money in an ins!re %an& acco!nt. $hich %ehavior characteristic have yo!
evelope as a res!lt of the mar&et o#nt!rn(
B. get-evenitis
). mental acco!nting
*. regret aversion

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: 1yo'ic loss a!ersion

22-25
21. Ramon opene a com%ination la!nry an ry cleaning esta%lishment three years ago.
)!e to his e"cellent service an reasona%le prices, his %!siness has gro#n an is oing 3!ite
#ell financially. <e has consiere e"paning this %!siness %y opening another location %!t
&eeps p!tting off that ecision for fear that the secon location #ill not %e a s!ccess. Ramon
is c!rrently isplaying #hich one of the follo#ing %ehavior characteristics(
A. self-attri%!tion %ias
B. overconfience
C. regret aversion
). ho!se money effect
*. frame epenence

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: -egret a!ersion

22. +hyllis is planning for her retirement in fifteen years. ;he &no#s that she can c!rrently
live reasona%ly #ell on ?/7,::: a year given that she is e%t-free. Base on her family history
she e"pects to ie ten years after she retires. -h!s, she comp!tes her retirement nee as
?/7,::: a year for 1: years. $hich one of the follo#ing %ehaviors applies to +hyllis(
A. regret aversion
B. money ill!sion
). eno#ment effect
*. myopic loss aversion

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: 1oney illusion

22-27
24. >ate is attempting to sell her ho!se for ?24:,:::. Fre lives across the street in an
ientical ho!se. Fre recently state to his #ife that >ate.s ho!se is pro%a%ly #orth only
?22:,::: %!t that once she sells her ho!se, he #o!l li&e to p!t their ho!se on the mar&et at
?272,::: an then move into a conomini!m. $hich one of the follo#ing %ehaviors applies
to Fre(
B. ho!se money effect
C. money ill!sion
). self-attri%!tion %ias
E. eno#ment effect

AACSB: N/A
Difficulty: Basic
Section: ""%)
&o'ic: 2ndowment effect

25. =o! recently overhear yo!r %oss telling someone that if he. act!ally cr!nche some
n!m%ers an one some analysis instea of 0!st going #ith his instincts that he never #o!l
have opene the ne# store in Centre City. $hich one of the follo#ing ca!se yo!r %oss to
ma&e a %a ecision(
A. regret aversion
B. eno#ment effect
C. money ill!sion
D. affect he!ristic

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: Affect (euristic

22-29
27. Roger.s Meat Mar&et is a chain of retail stores that limits its sales to fresh-c!t meats. -he
stores have %een very profita%le in northern cities. <o#ever, #hen t#o stores #ere opene in
the so!th, %oth lost money an ha to %e close. Roger, the o#ner, has no# concl!e that no
so!thern-%ase store sho!l %e opene as it #o!l not %e profita%le. $hich one of the
follo#ing applies to Roger(
A. confirmation %ias
B. eno#ment effect
C. money ill!sion
). affect he!ristic
E. representativeness he!ristic

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: -e'resentati!eness (euristic

29. @p !ntil three years ago, A.C. )ime opene an average of ten ne# retail stores a year. 8ne
of those stores ha to %e close #ithin t#o years !e to poor sales. -his 9: percent s!ccess
ratio #as fairly steay for over /: years. ;tarting three years ago, the firm has opene 1: ne#
stores an every one ha significant profits #ithin 4 months. Management %elieves their
recent s!ccess is not 0!st a ranom event an that all f!t!re stores #ill %e profita%le. -h!s, the
managers have ecie to open a minim!m of 12 ne# stores each year. -he managers are
s!ffering from:
A. ar%itrage limitations.
B. anchoring an a0!stment.
C. aversion to am%ig!ity.
D. the cl!stering ill!sion.
*. myopic aversion.

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: Clustering illusion

22-/:
/:. =o! are employe as a commission-%ase sales cler& for a cosmetics retail store. =o!
&no# that on average, e"actly 2: percent of the c!stomers that enter yo!r store #ill ma&e at
least one p!rchase. -h!s far this morning, yo! have #aite on eight c!stomers #itho!t
ma&ing a single sale. =o! are convince that the ne"t c!stomer yo! #ait on #ill %!y
something. -his %elief is &no#n as:
A. aversion to am%ig!ity.
B. the la# of small n!m%ers.
C. anchoring an a0!sting.
D. gam%ler.s fallacy.
*. false consens!s.

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: 3ambler's fallacy

/1. =o! on.t partic!larly li&e to shop so only go to the mall once a month. -o help ma&e the
tre& more en0oya%le, yo! al#ays have l!nch at the resta!rant locate insie the mall. ;ince
yo! are s!ch a creat!re of ha%it, yo! al#ays orer the same meal. =o!.ve notice that the price
of that meal has increase every time yo! have %een there over the past si" months. -h!s, yo!
e"pect the meal to increase in price ne"t month. -his is an e"ample of #hich one of the
follo#ing(
A. recency %ias
C. frame epenence
). aversion to am%ig!ity

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: -ecency bias

22-/1
/2. =o! starte an online %!siness three #ee&s ago. -h!s far, yo! have average 1: sales a
ay, #hich is one sale for every five hits. =o! are no# consiering giving !p yo!r ay 0o% an
%ecoming a f!ll-time online retailer. =o! have calc!late the amo!nt of income yo! can earn
%ase on 1: sales a ay an &no# that level of income #o!l s!pport yo! in a comforta%le
fashion. -he %elief that yo! #ill have 1: sales per ay on average if this %ecomes yo!r f!ll-
time occ!pation is %ase on #hich one of the follo#ing(
). %!%%le an crash theory

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: Law of small numbers

//. =o! are a har-charging manager #ho oesn.t really li&e to sit at a es& for too long. =o!
prefer to gather information 3!ic&ly, ma&e a ecision, an move on to the ne"t item on yo!r
agena. $hich one of the follo#ing applies to yo!(
A. availa%ility %ias
B. ar%itrage limits
*. regret aversion

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: A!ailability bias

22-/2
/1. =o! have save a total of ?2::,::: over the past several years. Aane, a tr!ste %!siness
associate, recently approache yo! #ith an offer. ;he has offere yo! a partnership in a ne#
firm that she e"pects to %e e"ceeingly profita%le. =o!r initial investment in the partnership
#o!l %e ?122,:::. <o#ever, Aane cannot give yo! any os on that s!ccess occ!rring. =o!
have ecie to &eep yo!r ?122,::: an forego this opport!nity simply %eca!se yo! on.t
&no# the pro%a%ility of s!ccess. $hich one of the follo#ing %ehavior characteristics o yo!
have(
A. aversion to am%ig!ity
B. recency %ias
C. sentiment-%ase ris& aversion
). cl!stering ill!sion
*. money ill!sion

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: A!ersion to ambiguity

/2. =o! are the manager of a retail store. =o! %elieve the economy is in a recession an that
sales for the month #ill %e !n!s!ally slo#. ;ince yo! have complete iscretion over the
pricing at yo!r location, yo! ecie to have a store-#ie sale an offer 1: percent off all
merchanise for a /-ay perio. =o! on.t e"pect yo!r s!periors to critici'e this ecision as
yo! %elieve they, along #ith the ma0ority of the other store managers, feel the same #ay a%o!t
the economy as yo! o. $hich one of the follo#ing applies to yo!(
A. recency %ias
B. la# of small n!m%ers
D. false consens!s
*. money ill!sion

AACSB: N/A
Difficulty: Basic
Section: ""%+
&o'ic: *alse consensus

22-//
/4. $hich of the follo#ing create limits to ar%itrage(
I. ris&s relate to an inivi!al firm
II. implementation costs
III. rational traers
IB. noise traers
A. I an III only
B. II an IB only
C. I, II, an III only
D. I, II, an IB only

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.

/5. AB In!stries is an all-e3!ity firm that has ?7 per share in cash an a %oo& val!e per share
of ?12. At #hich one of the follo#ing mar&et prices #o!l yo! &no# #ith a%sol!te certainty
that the stoc& #as misprice(
A. ?5
B. ?7
C. ?1:
). ?12
*. ?1/

AACSB: N/A
Difficulty: Basic
Section: ""%.
&o'ic: 1ar/et mis'ricing

22-/1
/7. $hich of the follo#ing have %een offere as factors contri%!ting to the mar&et crash of
1975(
I. re3!irement for only a 1: percent cash payment to p!rchase a stoc&
II. program traing
III. irrational investors
IB. preceeing %ear mar&et
A. I an III only
B. I an IB only
C. II an III only
*. I, II, an IB only

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: 1ar/et cras( of $456

/9. $hich one of the follo#ing statements relate to mar&et crashes is correct(
A. Financial mar&et crashes are !ni3!e to the @nite ;tates.
B. A severe mar&et ecline tens to occ!r over a m!lti-ay perio.
C. 8nce the mar&et finally crashe in 1929, stoc& prices %egan to slo#ly increase again.
). -he mar&et crash of 1975 occ!rre on a ay #hen traing vol!me #as light inicating
there #ere a limite n!m%er of irrational investors involve.
*. Actions in $ashington, ).C. may have helpe contri%!te to the mar&et crash in 1929 %!t
not to the 1975 crash.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: 1ar/et cras(es

22-/2
1:. $hich one of the follo#ing statements is tr!e(
A. Mar&et crashes ten to %e accompanie %y lo# mar&et vol!me.
B. -he Asian mar&et crash #as follo#e %y a 3!ic& recovery.
C. -he mar&et crash of 1929 an the crash of 1975 are very similar in %oth the percentage
ecline in mar&et val!e an in the ens!ing mar&et recovery.
D. Mar&et crashes ten to follo# mar&et %!%%les.
*. Mar&et %!%%les an crashes prove that financial mar&ets are inefficient.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%.
&o'ic: 1ar/et bubbles and cras(es

11. <istorical ret!rns s!pport #hich one of the follo#ing statements(
A. Financial mar&ets are highly inefficient as s!ggeste %y %ehavioral finance.
B. +rofessional money managers ten to o!tperform the Bang!ar 2:: ine" f!n a%o!t 22
percent of the time on average.
C. -he longer the time span, the more apt a professional money manager is to o!tperform an
ine" f!n, s!ch as the ;C+ 2::.
). <istorical ata s!pports the statement that ar%itrage is !nlimite an res!lts in a totally
efficient mar&et.
E. -he financial mar&ets appear to %e efficient %eca!se, on average, they o!tperform
professional money managers.

AACSB: N/A
Bloom's: Knowledge
Difficulty: Basic
Section: ""%7
&o'ic: 1ar/et efficiency

22-/4
12. $hich of the follo#ing statements are correct(
I. Many professional f!n managers are pai #ell %!t fail to o!tperform as e"pecte.
II. +rofessional f!n managers that have ten!res in e"cess of ten years, ten to consistently
o!tperform the mar&et on a long-term %asis.
III. If a mar&et is tr!ly efficient, then all investments in that mar&et are 'ero net present val!e
opport!nities.
IB. Actively managing a f!n appears to %e the &ey to o!tperforming the mar&et.
A. I an III only
B. II an IB only
C. II an III only

AACSB: N/A
Difficulty: 8ntermediate
Section: ""%7
&o'ic: 1ar/et efficiency and 'rofessional managers

22-/5
Essay Questions

1/. +rovie an e"ample of a managerial ecision that ill!strates each one of the follo#ing
%ehaviors:
Behavior: 8verconfience
*"ample:
Behavior: Affect he!ristic
*"ample:
Behavior: ,oss aversion
*"ample:

;t!ent ans#ers #ill vary %!t sho!l correctly isplay the type of %ehavior inicate.
Fee%ac&: Refer to sections 22.2, 22./, an 22.1

AACSB: -eflecti!e t(in/ing
Bloom's: Analysis
Section: ""%"0 ""%) and ""%+
&o'ic: 8rrational be(a!ior e9am'les

22-/7
11. *"plain 1D the concept of ho!se money, 2D #hy the ho!se money concept is s!ch a
common %ehavior for so many inivi!als an /D #hy ho!se money is an irrational %ehavior.
<o!se money relates to the concept that inivi!als treat money ifferently epening !pon
the so!rce of that money. -hey are more conservative #ith ollars they have ha to #or& har
to earn an less so #ith ollars that have %een easy to o%tain. -he term 6ho!se money6 relates
this concept to gam%lers #ho are #illing to lose their prior #innings Ethe ho!se.s moneyD %!t
#ho are !n#illing to lose their initial investment Epersonal moneyD. -his %ehavior is irrational
%eca!se any ollar yo! posses has e3!al p!rchasing po#er.
Fee%ac&: Refer to section 22./

Section: ""%)
&o'ic: ,ouse money

12. *"plain #hy a lo#-price, lo# traing vol!me stoc& is more apt to present limits to
ar%itrage than is a high-price, high traing vol!me stoc&.
A lo#-price stoc& may %e less &no#n to investors ca!sing those investors to %e more noise
traers than informe traers. F!rther, any traing %y a rational traer #ill ten to ca!se the
stoc& price to move if the trae is of significant si'e. Rational traers #ith limite ollars may
not trae in the stoc& !e to the potential for traing costs to o!t#eigh any profit from a
mispricing.
Fee%ac&: Refer to section 22.2

Bloom's: Analysis
Section: ""%.

22-/9

Behavioral Finance: Implications For Financial Management

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Chapter 22 - Behavioral Finance: Implications for Financial Management

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