QUESTION 8 Which of the following about conventional finance and behavioural finance is correct? a. Conventional finance believes fundamental analysis or technical analysis could be used to earn abnormal returns. • Behavioural finance believes the financial market is efficient. C. Behavioural finance believes prices are correct and equal to intrinsic value. d. · Conventional finance argues that investors can process information correctly and make rational decisions. e. Behavioural finance claims that price can deviate from fundament value but will not last for an extended period.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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QUESTION 8
Which of the following about conventional finance and behavioural finance is correct?
a. Conventional finance believes fundamental analysis or technical analysis could be used to earn abnormal returns.
b.
Behavioural finance believes the financial market is efficient.
C.
Behavioural finance believes prices are correct and equal to intrinsic value.
d. Conventional finance argues that investors can process information correctly and make rational decisions.
e. Behavioural finance claims that price can deviate from fundament value but will not last for an extended period.
Transcribed Image Text:QUESTION 8 Which of the following about conventional finance and behavioural finance is correct? a. Conventional finance believes fundamental analysis or technical analysis could be used to earn abnormal returns. b. Behavioural finance believes the financial market is efficient. C. Behavioural finance believes prices are correct and equal to intrinsic value. d. Conventional finance argues that investors can process information correctly and make rational decisions. e. Behavioural finance claims that price can deviate from fundament value but will not last for an extended period.
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Conventional finance being traditional finance assumes the investor is a rational one and processes information unbiasedly and market is efficient.

Behavioral finance is a study of the behavioral patterns of investors and the financial market, that why investors lack self-control and make decisions on personal biases ignoring facts.

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