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1.Investors tend to sell their winners more frequently than their losers. This often leads to reduction of wealth. The primary reason is related to ________.

	a.	security analyst's recommendations
	b.	efficient market hypothesis
	c.	investor's sentiment
	d.	the U.S. tax code

2.Ferris et al. examined the trading volume of 30 smallest stocks stocks following price changes. They find that stocks with gains had ______ abnormal volume, whereas stocks with declines had ______ abnormal volume.

	a.	positive, positive
	b.	positive, negative
	c.	negative, negative
	d.	negative, positive

3.Selling the winner stock triggers the feeling of ______ and avoid _______ .

	a.	regret, pride
	b.	emptiness, pride
	c.	pride, regret
	d.	sadness, regret

4.Shefrin and Statman showed that fearing regret and seeking pride causes investors to be predisposed to selling losers too early and holding winners too long.

____True

____False

5.Investors often regret the actions they take, but seldom regret the ones they do not. Generally, a regret of omission is less painful than a regret of comission.

____True

____False

6.Markku Kaustia examined the volume in IPO trading between stocks trading above and below their offer price. Kaustia found that volume is ____ for IPOs selling below their offer price, while volume is _____ for IPOs trading above the offer price.

	a.	higher, higher
	b.	lower, higher
	c.	higher, lower
	d.	lower, lower

7.Usually we use the purchase price as the reference point if the investment horizon is longer than a year.

____True

____False

8.Li Jin and Anna Scherbina studied the changes made in mutual fund portfolios when a new portfolio manager takes over. They find that the new manager sells these underperforming positions _______ the highly performing positions.

	a.	about equal to
	b.	less than
	c.	more than

9.Schlarbaum et al. examined 75,000 round-trip trades from 1964 to 1970. They found that holding period is positively correlated with the annualized return.

____True

____False

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