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Judgment in Managerial Decision Making 8th Edition by Max H. Bazerman -Test Bank

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  • ISBN-10 ‏ : ‎ 1118065700
  • ISBN-13 ‏ : ‎ 978-1118065709

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Judgment in Managerial Decision Making 8th Edition by Max H. Bazerman -Test Bank

Chapter 09

Multiple Choice

1. Over time, the performance of mutual funds tends to:
a. Improve.
b. Decline.
c. Regress to the mean.
d. Outperform the market.
Ans: c
Response: p. 160

2. In order to come out to themselves as “winners” and to avoid becoming “losers”, investors tend to:
a. Hold on to stocks that are trading below purchase price.
b. Buy recent market winners.
c. Engage in frequent trade.
d. Implement the same investment strategies that they have used in the past.
Ans: a
Response: p. 169

3. From a strictly rational standpoint, the price at which a stock was purchased should be regarded as:
a. A reference point for judging gains and losses.
b. An indication of the stock’s past performance
c. A helpful guide to avoid impatient trading of the stock.
d. Arbitrary and meaningless.
Ans: d
Response: p. 170

4. Roughly what is the percentage of mutual funds will outperform the market both this year and the next year?
a. Around 50%
b. Around 25%
c. Around 6%
d. Around 0.1%

Ans: c
Response: p. 160

5. People probably do not invest enough in:
a. Stocks in the long-term.
b. Bonds in the short-term.
c. Recent market losers.
d. Recent market winners.
Ans: a
Response: p. 167

6. When Samuelson and Zeckhauser (1988) offered their participants to allocate their inheritance money between different options, participants displayed a consistent preference to invest in:
a. Risky stock.
b. Municipal bonds.
c. The same manner the money was previously invested.
d. None of the above
Ans: c
Response: p. 168

7. The basic advantage of index funds over actively managed mutual funds is that:
a. They have a higher likelihood of outperforming the market.
b. They will always yield a profit, however small.
c. Their operating fees are lower.
d. All of the above.
Ans: c
Response: p. 160

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