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1 CORRECT Conventional theories presume that investors ____________ and behavioral finance  presumes that they ____________. A) are irrational; are irrational B) are rational; may not be rational C) are rational; are rational D) may not be rational; may not be rational E) may not be rational; are rational Feedback: Conventional theories presume that investors are rational and behavioral finance presumes that they may not be rational. 2 CORRECT Some economists believe that the anomalies literature is consistent with investors  ____________ and ____________. A) ability to always process information correctly and  therefore they infer correct probability distributions  about future rates of return; given a probability  distribution of returns, they always make consistent and  optimal decisions B) inability to always process information correctly and  therefore they infer incorrect probability distributions  about future rates of return; given a probability  distribution of returns, they always make consistent and  optimal decisions C) ability to always process information correctly and  therefore they infer correct probability distributions  about future rates of return; given a probability  distribution of returns, they often make inconsistent or 
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This note was uploaded on 03/06/2012 for the course FINANCE 5700 taught by Professor Bob during the Spring '12 term at websteruniv.edu.

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