Conceptual suppose that you found evidence

7. (Conceptual) Suppose that you found evidence contradicting weak form efficiency. Why
might this persist?
A. It is too large to take advantage of
B. You actually found a new risk factor (two explanations for this: value/profit
potential is too small relative to trading costs needed or model is incorrect making
it a previously unknown risk factor)
C. Your trading makes it worse
D. All of these
E. None of these
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8. (Conceptual) We argued that the market is efficient for a “regular”
person. Given this, which of the following is NOT a valid reason for
them to pay attention to their portfolio?
9. (Conceptual) We argued that the market is generally efficient for
“regular” people. Which of the following is a reason why they might
choose to still pay attention to their portfolio?
10. (Conceptual) Why might a mispricing we find persist through time?
11. (Conceptual) Why might a mispricing we identified persist
through time?
A. It is actually a risk factor
B. It is too small for investors to take advantage of
C. Not all investors behave rationally
D. All of these are reasons that a mispricing might persist
E. None of these are reasons that a mispricing might persist
CH. 3: Behavioral Finance
Representativeness
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1. (Conceptual) A blog that you follow recently added a weekly stock
pick post. You see that every pick thus far has been very successful,
with a significant bump occurring in the days afterward. You figure
that this will continue, and so you choose to immediately buy the
next recommendation as soon as you read the post. What bias might
this be an example of?