Fin 322: Chapter 9 -- Behavioral Finance And Technical Analysis

Front 1

Behavioral finance

Back 1

Models of financial markets that emphasize potential implications of psychological factors affecting investor behavior.

Front 2

Conservatism bias

Back 2

Investors are too slow (too conservative) in updating their beliefs in response to recent evidence.

Front 3

Representativeness bias

Back 3

People are too prone to believe that a small sample is representative of a broad population and infer patterns too quickly.

Front 4

Framing

Back 4

Decisions are affected by how choices are posed, for example, as gains relative to a low baseline level or losses relative to a higher baseline.

Front 5

Mental accounting

Back 5

A specific form of framing in which people segregate certain decisions.

Front 6

Regret avoidance

Back 6

People blame themselves more for unconventional choices that turn out badly so they avoid regret by making conventional decisions.

Front 7

Prospect theory

Back 7

Behavioral theory that investor utility depends on gains or losses from starting position, rather than on their levels of wealth.

Front 8

Dow theory

Back 8

A technique that attempts to discern long- and short-term trends in stock market prices.

Front 9

Breadth

Back 9

The extent to which movements in broad market indexes are reflected widely in movements of individual stock prices.

Front 10

Relative strength

Back 10

Recent performance of a given stock or industry compared to that of a broader market index.

Front 11

Trin statistic

Back 11

The ratio of average volume in declining issues to average volume in advancing issues.

Front 12

Confidence index

Back 12

Ratio of the yield of top-rated corporate bonds to the yield on intermediate-grade bonds.

Front 13

Short interest

Back 13

The total number of shares currently sold-short in the market.

Front 14

Put/call ratio

Back 14

Ratio of put options to call options outstanding on a stock.