FINA 3904 Study Guide
Chapter 8, 1, 2
Chapter 8 Notes
o How investors make decisions and process information (cognitive psychology: the study
of how people think, reason, and make decisions)
o The area of research that attempts to underst
CHAPTER 1 Total dollar returns on a stock = Dividend Income + Capital Gain (Or loss)
Beginning Balance = Initial Investment
Ending Value = Stock price at the end + dividend
Percent return on stock = dividend income +capital gain (or loss) / Beginning stoc
FINA 3904 Exam 1
1. Which of the following is the basis for prospect theory?
Investors react differently to prospective gain and losses
2. According to the concept of loss aversion, individual investors are most apt to do which?
Sell stocks with gains mor