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14 Cards in this Set

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Behavioral finance

Models of financial markets that emphasize potential implications of psychological factors affecting investor behavior.
Conservatism bias
Investors are too slow (too conservative) in updating their beliefs in response to recent evidence.
Representativeness bias
People are too prone to believe that a small sample is representative of a broad population and infer patterns too quickly.
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.
Mental accounting
A specific form of framing in which people segregate certain decisions.
Regret avoidance
People blame themselves more for unconventional choices that turn out badly so they avoid regret by making conventional decisions.
Prospect theory
Behavioral theory that investor utility depends on gains or losses from starting position, rather than on their levels of wealth.
Dow theory
A technique that attempts to discern long- and short-term trends in stock market prices.
The extent to which movements in broad market indexes are reflected widely in movements of individual stock prices.
Relative strength
Recent performance of a given stock or industry compared to that of a broader market index.
Trin statistic
The ratio of average volume in declining issues to average volume in advancing issues.
Confidence index
Ratio of the yield of top-rated corporate bonds to the yield on intermediate-grade bonds.
Short interest
The total number of shares currently sold-short in the market.
Put/call ratio
Ratio of put options to call options outstanding on a stock.