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Chapter 08
Behavioral Finance and the Psychology of Investing
Multiple Choice Questions
1. What is the area of finance called that addresses issues such as how reasoning errors affect
investment decisions?
A. logical
B. individual
C. behavioral
D. rational
E. personal
2. Which one of the following is the basis for prospect theory?
A. Investors react differently to prospective gains and losses.

B. Investors make cognitive errors.
C. Some investors are irrational.
D. Investors react differently depending on the day of the week.
E. Investors suffer from money illusion.
3. Which one of the following defines frame dependence?

B. Investors tend to make more cognitive errors when they view investing as gambling.
C. Investors tend to be more irrational in bear markets than in bull markets.
D. Investors react differently depending on how an opportunity is presented.
E. Investors suffer from money illusion in bull markets but not in bear markets.
8-1
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
4. Mental accounting is the process of associating a stock with its:
A. prior day's market value.

B. expected value.
C. desired value.
D. purchase price.
E. lowest value.
5. Loss aversion is defined as:
A. the inability to mentally acknowledge a loss on a security.

B. selling any security for less than the price paid to acquire it.
C. selling a security as soon as it has increased significantly in value.
D. the reluctance to sell a security after it has decreased in value.
E. the tendency to quickly sell any investment that has decreased in value.
6. Representativeness heuristic is best explained as:
A. the process of assuming events are random even when they are not.
B. the creation of patterns in planned events.
C. concluding that casual factors cause random events when in fact they do not.
D. believing that random events that occur in clusters are truly random.
E. overconfidence in one's own skills as an investor.
7. The belief that information you hold is superior to information held by other investors best
describes:
A. over-confidence
B. the snakebite effect
C. the illusion of knowledge
D. the clustering illusion
E. loss aversion
8-2
8. An unwillingness to take a risk after a loss describes:
A. over-confidence
E. loss aversion
9. Which one of the following is the tendency to believe that random events that occur in
clusters are not really random?
A. clustering illusion
B. sequential clustering
C. random grouping
D. representativeness heuristic
E. gambler's fallacy
10. Which one of the following best describes heuristics?
A. clustering
B. rules of thumb
C. grouping
D. representativeness
E. herding
11. The concept that well-capitalized, rational traders may be unable to correct a mispricing
defines which one of the following terms?
A. noise trading bounds

B. market bounds
C. limits to arbitrage
D. implementation limits
E. sentiment borders
8-3
12. Which one of the following is a trader whose trades are not based on meaningful financial
analysis or information?
A. specialist
B. arbitrageur
C. noise trader
D. sentiment trader
E. market maker
13. Which one of the following risks is related to irrational beliefs?
A. systematic
B. firm-specific
C. industry-specific
D. sentiment-based
E. market
14. Technical analysis is the study of which one of the following as the basis for trading?
A. systematic risk
B. historical prices
C. dividend growth
D. financial statements
E. investor's required return
8-4
15. Dow theory is a method of predicting future market movements based on which of the
following Dow Jones averages?
I. industrial
II. transportation
III. utilities
IV. commodities
A. I and II only
B. II and III only
C. III and IV only
D. I and IV only
E. I, II, and III only
16. According to Elliott wave theory, market predictions should be based on which one of the
following?
A. eight-week repetitive trading patterns

B. the tidal waves created by the gravitational pull of the moon
C. series of historical market price swings
D. an industry's historical rate of growth
E. market fads and trends
17. The minimum price at which a security is expected to trade is called the:
A. stop value.
B. par value.
C. Elliott wave price.
D. resistance level.
E. support level.
8-5
18. The maximum price at which a security is expected to trade is called the:
A. fourth wave.
B. stop limit.
C. relative point.
E. support level.
19. The measure of performance of one investment compared to another investment is called
the:
A. wave height.
B. relative arm.
C. relative strength.
D. bar height.
E. support factor.
20. Prospect theory is based on the concept that investors are:
A. always risk takers.

B. risk-adverse regarding losses.
C. risk-taking regarding losses.
D. always risk-averse.
E. neutral regarding risk.
8-6
21. Which one of the following statements is correct regarding prospect theory?
A. Average investors tend to lose more money than they earn from investing.
B. Typical investors feel that losing $1 is twice as painful as the pleasure derived from
making $1.
C. Investors should focus on gains and losses in individual securities rather than their
portfolio's total value.
D. Typical investors tend to react irrationally only when focusing on total portfolio value.
E. Average investors tend to prefer higher levels of risk.
22. Phil is a contestant on a game show. At this point in the game, he can either accept $500 or
spin a wheel for a chance of winning $100,000. Which type of behavior is he displaying if he
spins the wheel?
A. forward-looking
B. risk-adverse
C. prospective
D. introspective
E. risk-taking
23. Investors tend to make better decisions when looking at a decision:
A. based on historical performance.

B. only in respect to potential losses.
C. based on individual securities.
D. in broad terms.
E. based on historical costs.
8-7
24. Which one of the following is an example of mental accounting?
A. associating a security's gains or losses based on its purchase price

B. calculating the gain or loss on a security on a daily basis
C. computing the amount of tax due on the gain from a stock sale
D. considering the gain realized when a stock pays a dividend
E. comparing the gains and losses on a portfolio to those of the overall market
25. According to the concept of loss aversion, individual investors are most apt to do which one
of the following?
A. sell stocks with gains more frequently than stocks with losses
B. sell stocks with losses more frequently than stocks with gains
C. hold stocks with gains and sell stocks with losses
D. sell all stocks after a pre-determined length of time
E. hold all stocks unless they decline more than ten percent in value
26. According to the concept of house money, individual investors are most apt to do which one
of the following?
A. take more risks with their initial investment than with the gains on that investment
B. value money differently depending upon its source
C. treat paper profits the same as initial cash investments
D. apply the same level of risk-aversion to all investments
E. place high value on paper profits but low value on paper losses
8-8
27. Peter hesitates when it comes to picking an individual stock to purchase as he feels that he
will later realize that a different stock would have been a better investment. Peter is suffering
from:
A. money illusion.
B. frame dependence.
C. regret aversion.
D. risk-taking.
E. mental accounting.
28. The tendency to overvalue an item because you own it is referred to as which one of the
following?
A. endowment effect
B. money illusion
C. regret aversion
D. myopic loss aversion
E. sunk cost fallacy
29. Yesterday, Krista stated that Overland stock was only worth $12 a share and since it was
selling for $15 a share, she declared it overpriced and refused to buy any shares. This
morning, she learned that she is inheriting 3,500 shares of Overland stock from her
grandmother. Suddenly, she is saying that Overland stock is a great buy at $15 and is
probably worth at least $17 a share. This is an example of which one of the following?
A. endowment effect
B. money illusion
C. regret aversion
8-9
30. Ted constantly ignores the effects of inflation on money. Ted is suffering from which one of
the following?
A. endowment effect
B. money illusion
C. regret aversion
31. Investors who tend to invest too heavily in the securities issued by their employer suffer from
the condition known as:
A. overconfidence.
B. loyalty adherence.
C. status quo.
D. local adhesion.
E. familiarity.
32. Which one of the following statements appears to be correct based on current research?
A. Single, female investors tend to earn lower returns than their male counterparts.
B. Overconfidence tends to result in lower returns.
C. Excessive trading tends to increase returns.
D. Men tend to trade less frequently than women.
E. Investors with higher incomes tend to be more risk-adverse than other investors.
8-10
33. The increased cash flows into mutual funds that have recently had superior returns is most
associated with which one of the following characteristics?
A. overconfidence
B. excess trading
C. clustering illusion
D. diversification
E. risk aversion
34. Tricia has lost money on a particular stock for the past three years. Thus, she believes the
stock will have a high positive rate of return this year because earning a good return is long
overdue. This assumption is best described as the:
A. law of small numbers.

B. house money effect.
C. gambler's fallacy.
D. false consensus.
E. recency bias.
35. Four of the last five stocks your investment adviser recommended have outperformed the
market.
Thus, you believe that if you continue to follow her advice, that 80 percent of your
investments will outperform the market over the long term. This belief is based on the:
A. gambler's fallacy.
B. law of small numbers.
C. law of large numbers.
D. clustering illusion.
E. positive performance illusion.
8-11
36. According to the theory of recency bias, investors tend to believe the financial markets will:
A. gravitate to their long-term average rates of return.

B. react over the next year in direct opposition to the performance of the prior year.
C. have a maximum of three years of positive annual returns before declining somewhat.
D. continue to perform as they have over the past couple of years.
E. tend to reverse direction at least every five years.
37. Which one of the following is a characteristic of the self-attribution bias?
A. believing what you wish to believe

B. placing too much weight on information which you can gather easily
C. believing that other investors agree with your thinking
D. taking credit for the wins and blaming the losses on bad luck
E. believing that your recent performance is an indication of your future performance
38. Which of the following are impediments to the correction of a security's mispricing?
I. sentiment-based risk
II. implementation costs
III. firm-specific risk
IV. noise trader risk
A. II only
B. II and IV only
C. I, III, and IV only
D. II, III, and IV only
E. I, II, III, and IV
8-12
39. Which one of the following market sentiment index (MSI) values represents the best buying
opportunity?
A. 0.16
B. 0.29
C. 0.48
D. 0.61
E. 0.82
40. Which one of the following market sentiment index (MSI) values indicates that all polled
investors were bearish?
A. -1
B. 0
C. 1
D. 50
E. 100
41. Which one of the following indicates the long-run direction of the market according to Dow
Theory?
A. daily fluctuations
B. secondary reaction
C. monthly changes
D. primary trend
E. tertiary trend
8-13
42. What is the primary purpose of Dow theory?
A. to measure the level of investor optimism and pessimism

B. to analyze daily market movements
C. to identify and measure market waves
D. to eliminate market corrections
E. to signal changes in the market's primary direction
43. According to Dow theory, which one of the following is the primary means of eliminating
secondary market trends?
A. corrections
B. confirmations
C. continuations
D. conversions
E. coordinated trades
44. If you are a proponent of the Elliott wave theory, you are most apt to do which one of the
following?
A. sell on wave 2
B. sell on wave 3
C. buy on wave A
D. buy on wave 2
E. buy on wave 5
8-14
45. According to technical analysis, which one of the following is best seen as a buying
opportunity?
A. a breakout of a resistance level

B. an MSI value of 0.1 or less
C. a downward sloping advance/decline line
D. a flat advance/decline line
E. top of Elliott wave 5
46. You recently heard a news announcer state that the market is approaching its support level.
Which one of the following is the best interpretation of that statement?
A. The market is approaching the lowest level that is reasonably expected.

B. The federal government will step in to help the market retain its value should the market
slip much further.
C. The market is almost at a peak and is expected to start declining in the near future.
D. The market is almost to the point where trading will be suspended temporarily.
E. The market is almost equivalent in value to the international markets so price stabilization
is expected.
47. Which one of the following advance/decline lines is the most bullish signal?
A. relatively flat
B. slightly upward sloping
C. slightly downward sloping
D. steeply upward sloping
E. steeply downward sloping
8-15
48. Which of the following are bullish indicators?
I. flat advance/decline line

II. breakout of a support level
III. Arms ratio of .38
IV. heavy advancing volume
A. I and II only
B. III and IV only
C. I and III only
D. II and III only
E. I and IV only
49. If the closing tick of the day is +32, this means that the:
A. DJIA ended the day up 32 basis points.

B. discount rate at the end of the day was 3.20 percent.
C. number of stocks closing on an uptick was 32.
D. number of stocks closing on an uptick exceeded those closing on a downtick by 32.
E. number of stocks closing on an uptick was 32 more than on the prior trading day.
50. Which one of the following Arms values is the most bearish?
A. .28
B. .45
C. .88
D. 1.03
E. 1.26
8-16
51. For the past year, a particular stock has a relative strength value of 1.03 as compared to the
market. This means that the stock:
A. increased in value 3 percent more than the market for the day.
B. has 3 percent more risk than the average security.
C. outperformed the market for the period.
D. had 3 percent higher trading volume on a growth basis as compared to the market.
E. is selling for 103 percent of the market value per share.
52. A "block trade" is a trade in excess of how many shares?
A. 1,000
B. 5,000
C. 10,000
D. 50,000
E. 100,000
53. Which one of the following statements is correct concerning an open-high-low-close bar
chart?
A. The prices indicated by the two horizontal lines are the maximum and minimum daily
prices.
B. The upper trendline indicates the support level.
C. If the overall price movement is downward, the lower trendline is called the channel line.
D. If the overall price movement is upward, the upper trendline is called the head line.
E. The final price of the day is indicated by a horizontal line to the left side of the vertical line.
8-17
54. According to technical analysts, pricing patterns such as the head and shoulders are
indicators of potential:
A. reversals from the main trend line.

B. upcoming corrections which will return the market to the current main trend line.
C. increasing strength for the main trend line.
D. decreasing market activity.
E. increasing market activity.
55. Which one of the following is correct concerning a head and shoulders top pattern?
A. The outside of the right shoulder is a bullish signal.

B. The shoulders are higher than the head.
C. The left shoulder must be higher than the right shoulder, but lower than the head.
D. A piercing of the neckline is a reversal signal.
E. The trendline must be relatively flat throughout the pattern.
56. Which one of the following statements is correct regarding moving averages?
A. The 50-day moving average reflects the long-term trend of the market.
B. An exponential moving average is a weighted average.
C. Moving averages are used primarily to measure trading volume.
D. Short-term and long-term moving averages always move in the same direction.
E. Moving averages are generally computed using average daily prices.
8-18
57. Assume the 50-day moving average is currently intersecting the 200-day moving average.
Also assume the 50-day average is downward sloping and the 200-day average is upward
sloping. Which one of the following statements is accurate based on this information?
A. The 50-day moving average is bullish.

B. The short-term forecast is bullish.
C. The long-term trend may be preparing to change.
D. The long-term outlook is bearish.
E. The short-term trend will change to match the long-term trend.
58. Bollinger bands:
A. graphically reflect the differences between two moving averages.

B. graphically depict the relative strength of a security as compared to the market.
C. are a graphical representation of an exponential moving average.
D. depict a 2-standard deviation bound around a moving average.
E. are equal to the 20-day moving average plus or minus one standard deviation.
59. A stock's price has been relatively constant for an extended period of time. In this instance,
the Bollinger bands are:
A. relatively close to each other.

B. non-existent.
C. vertical.
D. steeply upsloping.
E. steeply downsloping.
8-19
60. Investors who use the MACD indicator as a signal for trading are most apt to buy a security
when the MACD:
A. equals zero.
B. is equal to 1.0.
C. rises above the signal line.
D. parallels the signal line.
E. falls below the signal line.
61. Which of the following are considered in the computation of money flows?
I. last trade price

II. current trade price
III. volume of each trade
IV. time of each trade
A. I and IV only
B. II and III only
C. I, II, and III only
62. Assume a stock's price remains relatively stable while the money flow becomes highly
positive. Which one of the following is most expected given this scenario?
A. price decrease
B. stable price
C. price increase
D. increasing trading volume
E. decreasing trading volume
8-20
63. Fibonacci numbers:
A. are all odd numbers of increasing value.

B. result in a golden mean which has an approximate value of 1.618.
C. are the square roots of the products of the two previous numbers in the series.
D. result in a phi which is approximately equal to .382.
E. are a series of numbers which are equal to the product of the two previous numbers.
64. Some technical analysts use Fibonacci numbers to predict:
A. primary trend breakthroughs.

B. market turnarounds.
C. secondary market trend lines.
D. relative performance values.
E. resistance and support levels.
65. Which one of the following is seen as a bearish indicator?
A. decreased short selling

B. increased buying by odd-lot traders
C. shorter skirt lengths
D. a Super Bowl win by a National Football League team
E. tight Bollinger bands
66. A survey of 64 of your fellow classmates determines that 19 of them are bullish on the market
while the remainder is bearish. What is the market sentiment index for this group of
individuals?
A. .28
B. .33
C. .44
D. .58
E. .70
8-21
67. A recent survey indicates that 1,731 people are bearish on the market for every 1,000 that are
bullish. What is the value of the market sentiment index based on this information?
A. .36
B. .43
C. .57
D. .63
E. .75
68. Given the following information, what is the value of the advance/decline line on the third day
of this 3-day period?
A. -277
B. -198
C. +202
D. +326
E. +409
8-22
69. Given the following information, what is the value of the advance/decline line on the second
day of this 3-day period?
A. -889
B. -804
C. -294
D. +147
E. +402
70. Given the following information, what is the value of the closing Arms?
A. .82
B. .84
C. .92
D. 1.11
E. 1.22
8-23
A. 0.29
B. 0.36
C. 0.42
D. 2.81
E. 3.45
72. Last year, Kathy purchased 3 shares of stock A at $50 a share. At the same time, she
purchased 5 shares of stock B at $35 a share. Today, stock A is valued at $65 a share and
stock B is worth $42 a share. What is the relative strength of stock A as compared to stock
B?
A. .84
B. .88
C. .93
D. 1.04
E. 1.14
8-24
73. What is the 3-day simple moving average as of day 5, given the following information?
A. $35.28
B. $35.35
C. $35.41
D. $35.57
E. $35.62
A. $42.88
B. $43.13
C. $43.22
D. $43.31
E. $44.61
8-25
75. What is the 3-day exponential moving average as of day 4 assuming that a weight of 70
percent is placed on the most recent price?
A. $50.81
B. $50.84
C. $50.87
D. $50.90
E. $50.94
A. $39.04
B. $39.07
C. $39.13
D. $39.22
E. $39.28
8-26
77. Given the following information, what is the net money flow at the end of the trading day?
A. -213,500
B. -103,000
C. 91,200
D. 187,600
E. 257,800
A. -290,500
B. -85,100
C. 322,200
D. 235,000
E. 421,400
8-27
79. The series of Fibonacci numbers contains the sequential values of 610 and 987. What is the
next number in this series?
A. 1,264
B. 1,364
C. 1,419
D. 1,597
E. 1,633
80. The price of a stock increased from $32 to $38. Using phi, what are the primary and
secondary support areas for the stock?
A. $35.33; $33.67
B. $33.67; $35.33
C. $35.71; $34.29
D. $38.14; $36.99
E. $36.99; $38.14
81. Altoona Train stock increased from $18 a share to $25 a share. Based on phi, what are the
primary and secondary support areas for this stock?
A. $21.46; $19.19
B. $21.67; $20.38
C. $21.79; $20.11
D. $22.12; $20.58
E. $22.33; $20.67
8-28
Essay Questions
82. Draw a basic Elliott Wave Pattern. Identify each wave and indicate the waves that are
"corrective" and those that are "impulsive".
83. Explain the basics of prospect theory and provide an example that illustrates this theory.
84. Give some examples of how overconfidence affects investor behavior along with the results
that might be expected based on that behavior.
8-29
Chapter 08 Behavioral Finance and the Psychology of Investing
Answer Key
Multiple Choice Questions
1. What is the area of finance called that addresses issues such as how reasoning errors
affect investment decisions?
A. logical
B. individual
C. behavioral
D. rational
E. personal
See Section 8.1
Accessibility: Keyboard Navigation

Blooms: Remember
Learning Objective: 08-01 Prospect theory.
Level of Difficulty: 1 Easy
Section: 8.1
Topic: Behavioral finance
2. Which one of the following is the basis for prospect theory?

B. Investors make cognitive errors.
C. Some investors are irrational.
D. Investors react differently depending on the day of the week.
E. Investors suffer from money illusion.
See Section 8.2
8-30
Blooms: Remember
Section: 8.2
Topic: Prospect theory
3. Which one of the following defines frame dependence?

B. Investors tend to make more cognitive errors when they view investing as gambling.
C. Investors tend to be more irrational in bear markets than in bull markets.
D. Investors react differently depending on how an opportunity is presented.
E. Investors suffer from money illusion in bull markets but not in bear markets.
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Frame Dependence
4. Mental accounting is the process of associating a stock with its:
A. prior day's market value.

B. expected value.
C. desired value.
D. purchase price.
E. lowest value.
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Mental Accounting
8-31
5. Loss aversion is defined as:
A. the inability to mentally acknowledge a loss on a security.

B. selling any security for less than the price paid to acquire it.
C. selling a security as soon as it has increased significantly in value.
D. the reluctance to sell a security after it has decreased in value.
E. the tendency to quickly sell any investment that has decreased in value.
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Loss Aversion
6. Representativeness heuristic is best explained as:
A. the process of assuming events are random even when they are not.
B. the creation of patterns in planned events.
C. concluding that casual factors cause random events when in fact they do not.
D. believing that random events that occur in clusters are truly random.
E. overconfidence in one's own skills as an investor.
See Section 8.4

Blooms: Remember
Learning Objective: 08-02 The implications of investor overconfidence and misperceptions of randomness.
Section: 8.4
Topic: Representativeness Heuristic
8-32
7. The belief that information you hold is superior to information held by other investors best
describes:
A. over-confidence
E. loss aversion
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Illusion of Knowledge
8. An unwillingness to take a risk after a loss describes:
A. over-confidence
E. loss aversion
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Snakebite Effect
8-33
9. Which one of the following is the tendency to believe that random events that occur in
clusters are not really random?
A. clustering illusion
B. sequential clustering
C. random grouping
D. representativeness heuristic
E. gambler's fallacy
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Clustering Illusion
10. Which one of the following best describes heuristics?
A. clustering
B. rules of thumb
C. grouping
D. representativeness
E. herding
See Section 8.5

Blooms: Remember
Section: 8.5
Topic: Heuristics
8-34
11. The concept that well-capitalized, rational traders may be unable to correct a mispricing
defines which one of the following terms?
A. noise trading bounds

B. market bounds
C. limits to arbitrage
D. implementation limits
E. sentiment borders
See Section 8.6

Blooms: Remember
Learning Objective: 08-03 Sentiment-based risk and limits to arbitrage.
Section: 8.6
Topic: Limits to Arbitrage
12. Which one of the following is a trader whose trades are not based on meaningful financial
analysis or information?
A. specialist
B. arbitrageur
C. noise trader
D. sentiment trader
E. market maker
See Section 8.6

Blooms: Remember
Section: 8.6
Topic: Noise Trader
8-35
13. Which one of the following risks is related to irrational beliefs?
A. systematic
B. firm-specific
C. industry-specific
D. sentiment-based
E. market
See Section 8.6

Blooms: Remember
Section: 8.6
Topic: Sentiment-Based Risk
14. Technical analysis is the study of which one of the following as the basis for trading?
A. systematic risk
B. historical prices
C. dividend growth
D. financial statements
E. investor's required return
See Section 8.7

Blooms: Remember
Learning Objective: 08-04 The wide array of technical analysis methods used by investors.
Section: 8.7
Topic: Technical Analysis
8-36
15. Dow theory is a method of predicting future market movements based on which of the
following Dow Jones averages?
I. industrial
II. transportation
III. utilities
IV. commodities
A. I and II only
B. II and III only
C. III and IV only
D. I and IV only
E. I, II, and III only
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Dow Theory
16. According to Elliott wave theory, market predictions should be based on which one of the
following?
A. eight-week repetitive trading patterns

B. the tidal waves created by the gravitational pull of the moon
C. series of historical market price swings
D. an industry's historical rate of growth
E. market fads and trends
See Section 8.7

Blooms: Remember
8-37
Section: 8.7
Topic: Elliott Wave Theory
17. The minimum price at which a security is expected to trade is called the:
A. stop value.
B. par value.
C. Elliott wave price.
E. support level.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Support Level
18. The maximum price at which a security is expected to trade is called the:
A. fourth wave.
B. stop limit.
C. relative point.
E. support level.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Resistance Level
8-38
19. The measure of performance of one investment compared to another investment is called
the:
A. wave height.
B. relative arm.
C. relative strength.
D. bar height.
E. support factor.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Relative Strength
20. Prospect theory is based on the concept that investors are:
A. always risk takers.

B. risk-adverse regarding losses.
C. risk-taking regarding losses.
D. always risk-averse.
E. neutral regarding risk.
See Section 8.2

Blooms: Remember
Section: 8.2
8-39
21. Which one of the following statements is correct regarding prospect theory?
A. Average investors tend to lose more money than they earn from investing.
B. Typical investors feel that losing $1 is twice as painful as the pleasure derived from
making $1.
C. Investors should focus on gains and losses in individual securities rather than their
portfolio's total value.
D. Typical investors tend to react irrationally only when focusing on total portfolio value.
E. Average investors tend to prefer higher levels of risk.
See Section 8.2

Blooms: Remember
Section: 8.2
22. Phil is a contestant on a game show. At this point in the game, he can either accept $500
or spin a wheel for a chance of winning $100,000. Which type of behavior is he displaying
if he spins the wheel?
A. forward-looking
B. risk-adverse
C. prospective
D. introspective
E. risk-taking
See Section 8.2

Blooms: Understand
Section: 8.2
Topic: Risk-Adverse Behavior
8-40
23. Investors tend to make better decisions when looking at a decision:
A. based on historical performance.

B. only in respect to potential losses.
C. based on individual securities.
D. in broad terms.
E. based on historical costs.
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Frame Dependence
24. Which one of the following is an example of mental accounting?
A. associating a security's gains or losses based on its purchase price

B. calculating the gain or loss on a security on a daily basis
C. computing the amount of tax due on the gain from a stock sale
D. considering the gain realized when a stock pays a dividend
E. comparing the gains and losses on a portfolio to those of the overall market
See Section 8.2

Blooms: Understand
Section: 8.2
Topic: Mental Accounting
8-41
25. According to the concept of loss aversion, individual investors are most apt to do which
one of the following?
A. sell stocks with gains more frequently than stocks with losses
B. sell stocks with losses more frequently than stocks with gains
C. hold stocks with gains and sell stocks with losses
D. sell all stocks after a pre-determined length of time
E. hold all stocks unless they decline more than ten percent in value
See Section 8.2

Blooms: Understand
Section: 8.2
Topic: Loss Aversion
26. According to the concept of house money, individual investors are most apt to do which
one of the following?
A. take more risks with their initial investment than with the gains on that investment
B. value money differently depending upon its source
C. treat paper profits the same as initial cash investments
D. apply the same level of risk-aversion to all investments
E. place high value on paper profits but low value on paper losses
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: House Money
8-42
27. Peter hesitates when it comes to picking an individual stock to purchase as he feels that
he will later realize that a different stock would have been a better investment. Peter is
suffering from:
A. money illusion.
B. frame dependence.
C. regret aversion.
D. risk-taking.
E. mental accounting.
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Regret Aversion
28. The tendency to overvalue an item because you own it is referred to as which one of the
following?
A. endowment effect
B. money illusion
C. regret aversion
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Endowment Effect
8-43
29. Yesterday, Krista stated that Overland stock was only worth $12 a share and since it was
selling for $15 a share, she declared it overpriced and refused to buy any shares. This
morning, she learned that she is inheriting 3,500 shares of Overland stock from her
grandmother. Suddenly, she is saying that Overland stock is a great buy at $15 and is
probably worth at least $17 a share. This is an example of which one of the following?
A. endowment effect
B. money illusion
C. regret aversion
See Section 8.2

Blooms: Understand
Section: 8.2
Topic: Endowment Effect
30. Ted constantly ignores the effects of inflation on money. Ted is suffering from which one
of the following?
A. endowment effect
B. money illusion
C. regret aversion
See Section 8.2

Blooms: Remember
Section: 8.2
Topic: Money Illusion
8-44
31. Investors who tend to invest too heavily in the securities issued by their employer suffer
from the condition known as:
A. overconfidence.
B. loyalty adherence.
C. status quo.
D. local adhesion.
E. familiarity.
See Section 8.2

Blooms: Remember
Section: 8.3
Topic: Overconfidence
32. Which one of the following statements appears to be correct based on current research?
A. Single, female investors tend to earn lower returns than their male counterparts.
B. Overconfidence tends to result in lower returns.
C. Excessive trading tends to increase returns.
D. Men tend to trade less frequently than women.
E. Investors with higher incomes tend to be more risk-adverse than other investors.
See Section 8.3

Blooms: Remember
Section: 8.3
8-45
33. The increased cash flows into mutual funds that have recently had superior returns is
most associated with which one of the following characteristics?
A. overconfidence
B. excess trading
C. clustering illusion
D. diversification
E. risk aversion
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Clustering Illusion
34. Tricia has lost money on a particular stock for the past three years. Thus, she believes the
stock will have a high positive rate of return this year because earning a good return is
long overdue. This assumption is best described as the:
A. law of small numbers.

B. house money effect.
C. gambler's fallacy.
D. false consensus.
E. recency bias.
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Gambler's Fallacy
8-46
35. Four of the last five stocks your investment adviser recommended have outperformed the
market.
Thus, you believe that if you continue to follow her advice, that 80 percent of your
investments will outperform the market over the long term. This belief is based on the:
A. gambler's fallacy.
B. law of small numbers.
C. law of large numbers.
D. clustering illusion.
E. positive performance illusion.
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Law of Small Numbers
36. According to the theory of recency bias, investors tend to believe the financial markets
will:
A. gravitate to their long-term average rates of return.

B. react over the next year in direct opposition to the performance of the prior year.
C. have a maximum of three years of positive annual returns before declining somewhat.
D. continue to perform as they have over the past couple of years.
E. tend to reverse direction at least every five years.
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Recency Bias
8-47
37. Which one of the following is a characteristic of the self-attribution bias?
A. believing what you wish to believe

B. placing too much weight on information which you can gather easily
C. believing that other investors agree with your thinking
D. taking credit for the wins and blaming the losses on bad luck
E. believing that your recent performance is an indication of your future performance
See Section 8.4

Blooms: Remember
Section: 8.4
Topic: Self-Attribution Bias
38. Which of the following are impediments to the correction of a security's mispricing?
I. sentiment-based risk
II. implementation costs
III. firm-specific risk
IV. noise trader risk
A. II only
B. II and IV only
C. I, III, and IV only
See Section 8.6

Blooms: Remember
Section: 8.6
Topic: Limits to Arbitrage
8-48
39. Which one of the following market sentiment index (MSI) values represents the best
buying opportunity?
A. 0.16
B. 0.29
C. 0.48
D. 0.61
E. 0.82
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Market Sentiment Index
40. Which one of the following market sentiment index (MSI) values indicates that all polled
investors were bearish?
A. -1
B. 0
C. 1
D. 50
E. 100
See Section 8.7

Blooms: Remember
Section: 8.7
8-49
41. Which one of the following indicates the long-run direction of the market according to Dow
Theory?
A. daily fluctuations
B. secondary reaction
C. monthly changes
D. primary trend
E. tertiary trend
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Dow Theory
42. What is the primary purpose of Dow theory?
A. to measure the level of investor optimism and pessimism

B. to analyze daily market movements
C. to identify and measure market waves
D. to eliminate market corrections
E. to signal changes in the market's primary direction
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Dow Theory
8-50
43. According to Dow theory, which one of the following is the primary means of eliminating
secondary market trends?
A. corrections
B. confirmations
C. continuations
D. conversions
E. coordinated trades
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Dow Theory
44. If you are a proponent of the Elliott wave theory, you are most apt to do which one of the
following?
A. sell on wave 2
B. sell on wave 3
C. buy on wave A
D. buy on wave 2
E. buy on wave 5
See Section 8.7

Blooms: Understand
Section: 8.7
Topic: Elliott Wave Theory
8-51
45. According to technical analysis, which one of the following is best seen as a buying
opportunity?
A. a breakout of a resistance level

B. an MSI value of 0.1 or less
C. a downward sloping advance/decline line
D. a flat advance/decline line
E. top of Elliott wave 5
See Section 8.7

Blooms: Understand
Section: 8.7
Topic: Resistance Level
46. You recently heard a news announcer state that the market is approaching its support
level. Which one of the following is the best interpretation of that statement?
A. The market is approaching the lowest level that is reasonably expected.

B. The federal government will step in to help the market retain its value should the
market slip much further.
C. The market is almost at a peak and is expected to start declining in the near future.
D. The market is almost to the point where trading will be suspended temporarily.
E. The market is almost equivalent in value to the international markets so price
stabilization is expected.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Support Level
8-52
47. Which one of the following advance/decline lines is the most bullish signal?
A. relatively flat
B. slightly upward sloping
C. slightly downward sloping
D. steeply upward sloping
E. steeply downward sloping
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Advance/Decline Line
48. Which of the following are bullish indicators?
I. flat advance/decline line

II. breakout of a support level
III. Arms ratio of .38
IV. heavy advancing volume
A. I and II only
B. III and IV only
C. I and III only
D. II and III only
E. I and IV only
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Technical Indicators
8-53
49. If the closing tick of the day is +32, this means that the:
A. DJIA ended the day up 32 basis points.

B. discount rate at the end of the day was 3.20 percent.
C. number of stocks closing on an uptick was 32.
D. number of stocks closing on an uptick exceeded those closing on a downtick by 32.
E. number of stocks closing on an uptick was 32 more than on the prior trading day.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Closing Tick
50. Which one of the following Arms values is the most bearish?
A. .28
B. .45
C. .88
D. 1.03
E. 1.26
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Arms
8-54
51. For the past year, a particular stock has a relative strength value of 1.03 as compared to
the market. This means that the stock:
A. increased in value 3 percent more than the market for the day.
B. has 3 percent more risk than the average security.
C. outperformed the market for the period.
D. had 3 percent higher trading volume on a growth basis as compared to the market.
E. is selling for 103 percent of the market value per share.
See Section 8.7

Blooms: Remember
Section: 8.7
52. A "block trade" is a trade in excess of how many shares?
A. 1,000
B. 5,000
C. 10,000
D. 50,000
E. 100,000
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Block Trade
8-55
53. Which one of the following statements is correct concerning an open-high-low-close bar
chart?
A. The prices indicated by the two horizontal lines are the maximum and minimum daily
prices.
B. The upper trendline indicates the support level.
C. If the overall price movement is downward, the lower trendline is called the channel
line.
D. If the overall price movement is upward, the upper trendline is called the head line.
E. The final price of the day is indicated by a horizontal line to the left side of the vertical
line.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Price Channel
54. According to technical analysts, pricing patterns such as the head and shoulders are
indicators of potential:
A. reversals from the main trend line.

B. upcoming corrections which will return the market to the current main trend line.
C. increasing strength for the main trend line.
D. decreasing market activity.
E. increasing market activity.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Head and Shoulders Pattern
8-56
55. Which one of the following is correct concerning a head and shoulders top pattern?
A. The outside of the right shoulder is a bullish signal.

B. The shoulders are higher than the head.
C. The left shoulder must be higher than the right shoulder, but lower than the head.
D. A piercing of the neckline is a reversal signal.
E. The trendline must be relatively flat throughout the pattern.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Head and Shoulders Pattern
56. Which one of the following statements is correct regarding moving averages?
A. The 50-day moving average reflects the long-term trend of the market.
B. An exponential moving average is a weighted average.
C. Moving averages are used primarily to measure trading volume.
D. Short-term and long-term moving averages always move in the same direction.
E. Moving averages are generally computed using average daily prices.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Exponential Moving Average
8-57
57. Assume the 50-day moving average is currently intersecting the 200-day moving average.
Also assume the 50-day average is downward sloping and the 200-day average is upward
sloping. Which one of the following statements is accurate based on this information?
A. The 50-day moving average is bullish.

B. The short-term forecast is bullish.
C. The long-term trend may be preparing to change.
D. The long-term outlook is bearish.
E. The short-term trend will change to match the long-term trend.
See Section 8.7

Blooms: Understand
Section: 8.7
Topic: Moving Averages
58. Bollinger bands:
A. graphically reflect the differences between two moving averages.

B. graphically depict the relative strength of a security as compared to the market.
C. are a graphical representation of an exponential moving average.
D. depict a 2-standard deviation bound around a moving average.
E. are equal to the 20-day moving average plus or minus one standard deviation.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Bollinger Bands
8-58
59. A stock's price has been relatively constant for an extended period of time. In this
instance, the Bollinger bands are:
A. relatively close to each other.

B. non-existent.
C. vertical.
D. steeply upsloping.
E. steeply downsloping.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Bollinger Bands
60. Investors who use the MACD indicator as a signal for trading are most apt to buy a
security when the MACD:
A. equals zero.
B. is equal to 1.0.
C. rises above the signal line.
D. parallels the signal line.
E. falls below the signal line.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: MACD
8-59
61. Which of the following are considered in the computation of money flows?
I. last trade price

II. current trade price
III. volume of each trade
IV. time of each trade
A. I and IV only
B. II and III only
C. I, II, and III only
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Money Flow
62. Assume a stock's price remains relatively stable while the money flow becomes highly
positive. Which one of the following is most expected given this scenario?
A. price decrease
B. stable price
C. price increase
D. increasing trading volume
E. decreasing trading volume
See Section 8.7

Blooms: Remember
Section: 8.7
8-60
Topic: Money Flow
63. Fibonacci numbers:
A. are all odd numbers of increasing value.

B. result in a golden mean which has an approximate value of 1.618.
C. are the square roots of the products of the two previous numbers in the series.
D. result in a phi which is approximately equal to .382.
E. are a series of numbers which are equal to the product of the two previous numbers.
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Fibonacci Numbers
64. Some technical analysts use Fibonacci numbers to predict:
A. primary trend breakthroughs.

B. market turnarounds.
C. secondary market trend lines.
D. relative performance values.
E. resistance and support levels.
See Section 8.7

Blooms: Remember
Section: 8.7
8-61
65. Which one of the following is seen as a bearish indicator?
A. decreased short selling

B. increased buying by odd-lot traders
C. shorter skirt lengths
D. a Super Bowl win by a National Football League team
E. tight Bollinger bands
See Section 8.7

Blooms: Remember
Section: 8.7
Topic: Technical Indicators
66. A survey of 64 of your fellow classmates determines that 19 of them are bullish on the
market while the remainder is bearish. What is the market sentiment index for this group
of individuals?
A. .28
B. .33
C. .44
D. .58
E. .70
MSI = (64 - 19)/45 = .70

Blooms: Apply
Section: 8.7
8-62
67. A recent survey indicates that 1,731 people are bearish on the market for every 1,000 that
are bullish. What is the value of the market sentiment index based on this information?
A. .36
B. .43
C. .57
D. .63
E. .75
MSI = 1,731/(1,731 + 1,000) = .6338

Blooms: Apply
Section: 8.7
68. Given the following information, what is the value of the advance/decline line on the third
day of this 3-day period?
A. -277
B. -198
C. +202
D. +326
E. +409
Value of A/D line = 1,315 + 1,650 + 1,300 - 1,416 - 1,128 - 1,312 = +409
Blooms: Apply
8-63
Section: 8.7
69. Given the following information, what is the value of the advance/decline line on the
second day of this 3-day period?
A. -889
B. -804
C. -294
D. +147
E. +402
Value of A/D line = 1,211 + 1,360 - 1,806 - 1,654 = -889
Blooms: Apply
Section: 8.7
8-64
A. .82
B. .84
C. .92
D. 1.11
E. 1.22
Arms = (621,433,125/1,310)/(851,325,120/1,512) = .8425
Blooms: Apply
Section: 8.7
Topic: Arms
A. 0.29
B. 0.36
C. 0.42
D. 2.81
E. 3.45
Arms = (2,408,493,040/2,463)/(318,106,250/914) = 2.81
Blooms: Apply
8-65
Section: 8.7
Topic: Arms
72. Last year, Kathy purchased 3 shares of stock A at $50 a share. At the same time, she
purchased 5 shares of stock B at $35 a share. Today, stock A is valued at $65 a share and
stock B is worth $42 a share. What is the relative strength of stock A as compared to stock
B?
A. .84
B. .88
C. .93
D. 1.04
E. 1.14
Relative strength = (3 × $65)/(5 × $42) = .9286

Blooms: Apply
Section: 8.7
8-66
A. $35.28
B. $35.35
C. $35.41
D. $35.57
E. $35.62
3-day moving average as of day 5 = ($35.01 + $35.16 + $35.89)/3 = $35.35
Blooms: Apply
Section: 8.7
Topic: Simple Moving Average
8-67
A. $42.88
B. $43.13
C. $43.22
D. $43.31
E. $44.61
4-day moving average as of day 7 = ($44.61 + $42.83 + $42.65 + $43.13)/4 = $43.305
Blooms: Apply
Section: 8.7
Topic: Simple Moving Average
8-68
A. $50.81
B. $50.84
C. $50.87
D. $50.90
E. $50.94
Blooms: Apply
Level of Difficulty: 2 Medium
Section: 8.7
8-69
A. $39.04
B. $39.07
C. $39.13
D. $39.22
E. $39.28
Blooms: Apply
Section: 8.7
8-70
A. -213,500
B. -103,000
C. 91,200
D. 187,600
E. 257,800
Blooms: Apply
Section: 8.7
Topic: Money Flow
8-71
A. -290,500
B. -85,100
C. 322,200
D. 235,000
E. 421,400
Blooms: Apply
Section: 8.7
Topic: Money Flow
8-72
79. The series of Fibonacci numbers contains the sequential values of 610 and 987. What is
the next number in this series?
A. 1,264
B. 1,364
C. 1,419
D. 1,597
E. 1,633
Next number = 610 + 987 = 1,597

Blooms: Apply
Section: 8.7
80. The price of a stock increased from $32 to $38. Using phi, what are the primary and
secondary support areas for the stock?
A. $35.33; $33.67
B. $33.67; $35.33
C. $35.71; $34.29
D. $38.14; $36.99
E. $36.99; $38.14
Primary support = $38 - [($38 - $32) × .382] = $35.71

Secondary support = $38 - [($38 - $32) × .618] = $34.29

Blooms: Apply
Section: 8.7
8-73
81. Altoona Train stock increased from $18 a share to $25 a share. Based on phi, what are the
primary and secondary support areas for this stock?
A. $21.46; $19.19
B. $21.67; $20.38
C. $21.79; $20.11
D. $22.12; $20.58
E. $22.33; $20.67
Primary support = $25 - [($25 - $18) × .382] = $22.33

Secondary support = $25 - [($25 - $18) × .618] = $20.67

Blooms: Apply
Section: 8.7
Essay Questions
82. Draw a basic Elliott Wave Pattern. Identify each wave and indicate the waves that are
"corrective" and those that are "impulsive".
Answer will vary
Feedback: Students should draw a pattern similar to Figure 8.4 in the textbook. Waves 1-5
are "impulsive" and waves A-C are "corrective".
Blooms: Understand
Section: 8.7
Topic: Elliott Wave Pattern
8-74
83. Explain the basics of prospect theory and provide an example that illustrates this theory.
Answer will vary
Feedback: Prospect theory is the basic idea that investors respond more strongly to a loss
than to a gain. For example, an investor may feel that it takes a gain of $3 to offset the
pain of losing $1.
Blooms: Understand
Section: 8.2
84. Give some examples of how overconfidence affects investor behavior along with the
results that might be expected based on that behavior.
Answer will vary
Feedback: Overconfidence tends to cause investors to trade too frequently, which

increases trading costs. Overconfidence also causes investors to invest too heavily in their
employer's securities as well as securities of firms with which they are familiar. These
actions cause investor's portfolios to be too concentrated in certain securities and lack
sufficient diversification. Regardless of how overconfidence is displayed, it tends to lower
investor returns.
Blooms: Understand
Section: 8.3
8-75
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Maar als een bliksemstraal uit den zonnigen hemel, zoo trof dit
bericht den jongen Boer. Hij had zich nauwelijks nedergezet aan zijn
eigen haard, hij had nauwelijks den zoeten geur des vredes
ingeademd, en midden in die liefelijke, zoo vurig begeerde rust
kwam plotseling het stormgelui der oorlogsklok!
„Oorlog?” riep hij, terwijl hij overeind vloog: „oorlog?” Maar in ’t

volgende oogenblik had hij zijn evenwicht terug.
Met verwonderlijke zelfbeheersching ging hij weer zitten aan de

stevige, eikenhouten tafel tegenover zijn vrouw, en vraagde op
kalmen toon: „Het gaat zeker tegen de Engelschen?”
„Ja,” antwoordde de leeuwenjager, „ze willen Natal inpalmen.”
„Dat met het kostbare, edele Boerenbloed is gedrenkt?” zeide de

jonge Boer. „Maar zij hebben ’t nog niet,” liet hij er dreigend op
volgen.
„Doch zij zullen ’t krijgen,” antwoordde de leeuwenjager. „Ons volk is

uitgeput door de Kafferoorlogen; het moet zich herstellen van de
geslagen wonden, en de meeste lagers verkeeren in groote
armoede. Ja, de Engelschen zijn een zeer verstandig volk; zij kijken
hun tijd af.”
Er lag een snijdende bitterheid in den toon, waarop hij dit zeide.
„Dus gij beschouwt de zaak voor de Boeren verloren?” vraagde Dirk.
„Ik heb uw vader zooeven gesproken, hij denkt het eveneens,”

antwoordde de leeuwenjager.
„En waarom zullen wij dan vechten voor een verloren zaak?”
vraagde de jonge Boer verwonderd.
„Omdat die verloren zaak een rechtvaardige zaak is,” antwoordde de

leeuwenjager.
„Het heeft zijn nut, er het geweer voor te laden, en ’t kan zijn nut
hebben, er voor te—sterven.
„’t Zal een protest zijn tegen het schandelijk onrecht, dat ons wordt
aangedaan.”
Zijn stem beefde, toen hij dit zeide; ze beefde van ingehouden toorn.
Zijne oogen begonnen het vuur te weerkaatsen, dat in zijn boezem

brandde, en de diep in het hart van dezen [193]man sluimerende
hartstochtelijkheid kwam met macht naar boven.
„Zie,” zeide hij, „het bloed der Boeren heeft nog meer kracht dan een
kogel, en dat bloed zal tot God roepen om wraak over onze vijanden,
die ons wreed verdrukken.”
„Maar,” liet hij er zachter op volgen, „het is hard voor u, Anna, om uw

man, met wien gij nog geen jaar zijt gehuwd geweest, in den oorlog
te zien trekken.”
„Ja,” antwoordde zij, „dat is hard. Het zou met ons huwelijk slecht
staan, als ik mijn man gaarne zag scheiden. Maar,” liet zij er op
volgen, terwijl haar heldere blik vast op den leeuwenjager rustte,
„Barend Jansen zou zich over zijn dochter schamen, als zij tot haar
man zeide: „Blijf!””
„Barend Jansen zal zich nooit over zijn dochter te schamen hebben,”
antwoordde de leeuwenjager met een warmen toon in zijn stem.
„Toen ik haar met den bijl in de hand den ingang van het lager tegen
de woedende Zoeloe’s heb zien verdedigen, heb ik respect voor
haar gekregen.”
„Dus gij gaat mee?” wendde hij zich tot Dirk.
„Ja,” zeide Dirk met vaste stem. „Wanneer vertrekken wij?”
„Ik ga nu terug naar uw vader,” antwoordde de leeuwenjager; „het is

reeds afgesproken, dat uw broeder Willem meetrekt in den oorlog,
en hij zal mij vergezellen, om nog eenige andere Boeren in deze
streken op te roepen tot den oorlog. Overmorgen hopen wij u dan
aan de „drift” te ontmoeten, en rijden wij te samen onmiddellijk naar
Natal.”
Met deze afspraak verliet de leeuwenjager in den namiddag, nadat

hij bij hen had gegeten, de woning der jonggetrouwden.
De volgende dag is een drukke dag. Dirk bestelt zijn huis en regelt
alles. Zijn vrouw zal zoo goed het gaat zijn plaats vervullen, en op de
raad en de hulp van haren schoonvader kan zij rekenen. De meest
vertrouwde kafferknecht wordt binnengeroepen, en hij zal een extra
belooning ontvangen, als hij een oog in ’t zeil houdt.
Inmiddels bakt Anna beschuit, droogt zij vleesch, vult zij het leeren
zakje met gemalen koffie, en zorgt ze voor tabak. Dit is de proviand
voor haar man op reis. Soms verduistert haar helder oog, terwijl ze
dit alles en nog zoo [194]veel meer gereed maakt, maar zij houdt zich
taai, want zij weet, dat zij is de vrouw van een Afrikaanschen Boer.
In drukke bezigheden en beslommeringen gaat de dag voorbij. Men

gaat op den gewonen tijd ter ruste, maar vóór het krieken van den
morgen staat de jonge Boer op.
Hij begeeft zich naar den stal, naar Hannibal. Hij strijkt het edele dier
het kophaar uit de oogen en klopt het op den slanken hals.
Inmiddels heeft Anna het ontbijt gereed gemaakt, en samen gaan zij
aan de eenvoudige tafel zitten. Ach, het is een droevig ontbijt; Dirk
kan het brood niet door de keel krijgen.
Nu is het ontbijt afgeloopen; nu zal het op een scheiden gaan.
Anna neemt de kogeltasch, gevuld met de kogels, die zij heeft

gegoten; en hangt ze haren man om de schouders.
Dan reikt ze hem het geladen geweer.
„Strijdt wakker, geliefde man,” zegt zij.
Ja, wakker strijden, dat hoopt hij waarlijk te doen.
En nu komt het afscheid.
Zij staren elkander in de oogen, lang en innig, die man en die vrouw.
Zij lezen in elkanders oogen, en ach, daar is niets in geschreven dan
droefheid en liefde. Zij neemt zijn hoofd tusschen hare handen, kust
hem de tranen uit de oogen en zegt: „De Heere beware uwen
uitgang en uwen ingang!”
De oudste kaffer leidt het paard voor de huisdeur. Het ruikt de
frissche morgenlucht, en hinnikt vroolijk zijn jongen baas tegemoet.
Snel springt hij in het zaâl, en geeft het paard de sporen.
Zijn vrouw staat in de deur hem na te staren.
Hoe snel verdwijnt hij uit het gezicht!
Daar blikt hij nog eenmaal om, heft zich in den stijgbeugel op, en
zwaait tot een laatst vaarwel driemaal met het geweer boven zijn
hoofd, zoodat de blanke loop schittert in de eerste stralen der
morgenzon.
En nu ziet Anna niets meer, want de ruiter is achter den naasten

heuvelrand verdwenen. Zij ziet niets meer dan een nevel; dat zijn
hare tranen.
Maar den jongen Boer wordt het nu ruimer om het hart. Hij is nu op
het oorlogspad, en hij zal strijden voor vrijheid en recht!
Geen Hongaarsche ruiter jaagt sneller door de eenzame

[195]wildernissen van zijn vaderland, dan deze Afrikaansche Boer
over de ongemeten grasvelden der Transvaal.
Hij jaagt al sneller en sneller—het zuiden in.… naar Natal.… tot voor
de mond van het Engelsche kanon.…
[Inhoud]
HOOFDSTUK XXX.
Anna voelde zich thans zeer eenzaam. Nu eerst voelde zij de sterkte
van den band, die haar aan Dirk Kloppers bond.
Hoe menigmaal ging zij tegen het vallen van den avond op den
hoogsten heuvel in den omtrek, om te zien, of haar man nog niet
terugkwam! Zij wist, dat het dwaasheid was, zulks te doen, doch zij
had een weemoedig genot in die dwaasheid.
Ach, zij had hem lief—er is immers ook geen inniger, hechter,
teederder band te denken dan tusschen man en vrouw! Elken
morgen en elken avond smeekte zij op neergebogen knieën voor dat
zoo dierbaar leven, dat thans door de bommen der Engelsche
kanonnen werd bedreigd. Met haar gebeden wilde zij haar man
dekken als met een schild, en hare liefde wilde zich om hem heen
legeren als een slagorde met banieren!
Zoo lief had Anna haar man.
De tijd brak aan, dat zij een dochterke in haar armen hield. Het was
een allerliefst, mollig wichtje; het had de blauwe, schitterende oogen
van haren vader. Zij noemde het Mieke, naar zijn zuster, die in het
gevecht tegen de Zoeloe’s was bezweken, en soms ging er een
groote, heerlijke blijdschap door haar ziel, als zij dacht aan het
oogenblik, dat Dirk behouden terug zou komen, en dit lieve kindeke
aan zijn hart zou drukken.
Reikhalzend zag zij uit naar tijding, maar er verliepen weken en

maanden, zonder dat er tijding kwam.
Nu, dat was niet te verwonderen. Immers honderden mijlen wildernis
en het hooge Drakengebergte scheidden de streek, waar de familie
Kloppers woonde, van het gebied, [196]waar de bloedige botsing zou
plaats grijpen. Daarbij veroorzaakte de strijd tusschen de twee
blanke rassen een begrijpelijke spanning en gisting bij de
Kafferstammen, zoodat de wijd en zijd verspreide, als van de wereld
afgezonderde Emigranten-Boeren dicht bij huis en hof moesten
blijven, en weinig nieuws vernamen.
Eindelijk echter kwam er toch tijding, maar ’t was een vreeselijke,

ontzettende tijding. Zij zag er uit als een hoop harde, wreede
klipsteenen, waaronder het liefste ligt begraven, dat wij op aarde
bezitten.
Gert Kloppers zelf bracht de tijding.
Door de kleine vensterruiten zag Anna hem aankomen. Hij liep

gedrukt, gebogen; het scheen, dat een onzichtbare, doch zware last
hem neder drukte. Op zijn gelaat lag een trek van bittere smart.
En dat was niet te verwonderen, want Dirk was—dood! Dirk—de

trots van zijn oogen! De glans van zijn leven! Zijn eerstgeboren
zoon! Het wilde wat zeggen—Dirk dood!
Heden morgen had hij het vreeselijk bericht gehoord van een hem
bekend, rondreizend man, die pas uit Natal was gekomen. Die man
had het van een Boer, die zelf het gevecht tegen de Engelschen had
medegemaakt.
Dirk was met andere Boeren reeds tot de batterij der Engelschen
doorgedrongen; hij had de hand reeds gelegd op den zwaren,
ijzeren loop van het kanon, toen hij door den sabelhouw van een
Engelsch officier doodelijk werd getroffen.
Als een held was hij gevallen—voor vrijheid en recht!
Anna was, toen zij haren schoonvader zag aankomen, door bange
voorgevoelens gekweld, hem tegemoet gegaan.
Geen kreet, zelfs geen zucht kwam over hare lippen, toen Gert
Kloppers haar voorzichtig het treurige nieuws mededeelde. Slechts
beefden hare lippen, en de laatste bloeddrup week uit haar gelaat.
Zij greep den stam van een jongen appelboom, die verleden jaar
door Dirk was gepoot, om niet om te vallen.
Als in een droom liep zij, dagen lang. Maar eindelijk kwam zij tot de
werkelijkheid terug, en de diepe wateren der smart gingen over hare
ziel. Doch in de diepe wateren liggen de kostbare parels, en de
kostbaarste parel werd Anna’s deel.
Zij leerde zich zelve kennen, en zij leerde de roede kussen, die haar
sloeg. Van wege hare vele tranen kon zij [197]den Heiland niet zien,
maar zij voèlde de hand van den liefderijken Herder, die het verloren
schaap zocht, en zij hoòrde Zijne stem: „Komt herwaarts tot Mij
allen, die vermoeid en belast zijt, en ik zal u ruste geven!”
Hare schoonouders kwamen haar dagelijks bezoeken. Men zette

zich dan aan de eikenhouten tafel, waar Dirk en Anna zoo dikwijls
plachten te zitten, en men sprak met elkander over lieve
herinneringen, waaraan de naam van Dirk was verbonden.
„En heden zou Dirk jarig zijn geweest,” zeide Moeder Kloppers een
keer.
„Ja,” zeide Anna, „heden. Verleden jaar hebben wij dien verjaardag
nog samen gevierd; wij waren pas eenige weken getrouwd. Het
verschil is groot tusschen vrouw en weduwe.”
Ja, dat verschil was werkelijk groot.

Zij bedekte haar gelaat en weende.
Honderden mijlen van Anna’s woning verwijderd, aan een der

zuidelijkste punten van Natal, waar de golven van den Indischen
Oceaan zich breken tegen het strand, stonden op dienzelfden dag
een zestal kloeke ruiters bij hunne gezadelde paarden.
De paarden sloegen ongeduldig met de voorpooten in het mulle

zand.
Nu sprongen de ruiters vlug in het zaâl.
De voorste sloeg met de vlakke hand op den slanken hals van zijn
zwarten hengst, en zeide op vroolijken toon: „Vooruit, Hannibal! Naar
huis!”
Die ruiter droeg een breed, versch litteeken op zijn voorhoofd.
Dat litteeken was waarschijnlijk van een sabelhouw afkomstig. In elk

geval: het litteeken stond hem goed.
De ruiters gaven hun paarden de sporen.
Sneller, al sneller joegen zij door Natal, het land der duizend
heuvelen, het noorden in.… naar de Transvaal.… tot voor Anna’s
woning.… [198]
[Inhoud]
HOOFDSTUK XXXI.
Wat was er met de Emigranten-Boeren in Natal gebeurd? 1
De Engelsche wolf was uit zijn legerplaats opgerezen, want hij had
weer honger gekregen. Natal was een te welkome buit.
Reeds was er bij den Volksraad der Natalsche Boeren een

zonderlinge missive ingekomen. Zij kwam van den gouverneur der
Kaapkolonie en was van den volgenden inhoud: „Het is voor Hare
Majesteit niet mogelijk, een gedeelte harer eigene onderdanen, die
zich eenige honderden mijlen buiten de Kaap de Goede Hoop
hebben begeven, voor onafhankelijk te verklaren. Zoo de Boeren
een militaire macht willen ontvangen, dan zal Hare Majesteit hun al
die handelsvoorrechten waarborgen, die aan de àndere Britsche
koloniën zijn toegestaan, en dan zal het land, dat de Emigranten
thans hebben bezet, aan hen worden toegekend, in zooverre
rechtvaardigheid en billijkheid dit gedoogen.”
De Boeren stonden vreemd te kijken bij het lezen dezer missive.
Wat? Zij zouden Natal afstaan? Het schoone, liefelijke Natal, het
land der duizend heuvelen? Het land, dat zij twéé keeren hadden
gekocht, den eersten keer met aan de bedingen te voldoen, die
koning Dingaan had gesteld, den twééden keer met hun bloed? En
durfde de Engelsche regeering nu nog de woorden:
„rechtvaardigdheid” en „billijkheid” op de lippen te nemen, waar zij
bezig was, met een goed gehuicheld komediespel het schandelijkste
onrecht te begaan?
„Neen,” zeiden de èchte, oude Voortrekkers, en zij schudden toornig

hunne grijze lokken; „wij willen geen militaire macht van Engeland,
en wij dulden ze evenmin.”
Onmiddellijk beantwoordde de Volksraad het schrijven van den

Engelschen gouverneur in een stuk, even ernstig als waardig.
„Wij vermeenen,” zoo schreven de Boeren, „dat beide, Hare

Majesteit en Uwe Excellentie omtrent ons, onze aanspraak op het
recht van onafhankelijkheid en het recht, hetwelk wij tot het land
hebben, door ons geoccupeerd wordende, [199]verkeerd zijt
onderricht. Wij zijn van geboorte Hollandsche Afrikaanders. Dadelijk
nadat wij Harer Majesteits grondgebied in Zuid-Afrika hebben
verlaten, hebben wij onze onafhankelijkheid gepubliceerd, en van
dien tijd af tot op dit oogenblik hebben wij als een onafhankelijk Volk
gehandeld, ons zelven volgens onze eigene wetten geregeerd, en
gevolgelijk opgehouden, Britsche onderdanen te zijn. Het door ons
bewoond wordende land hebben wij wettig verkregen, en het is nooit
tot op dit oogenblik een Britsche provincie of kolonie geweest, en
niettegenstaande Uwer Excellentie’s herhaalde mededeelingen, dat
wij Britsche onderdanen en kolonisten zijn, moeten wij beweren, dat
wij volgens alle rechten van beschaafde natiën nóch het een nóch
het ander zijn. En verder bedanken wij voor Harer Majesteit’s
militaire macht. Wij hebben vrede met alle natiën, en wij hebben
geen bescherming noodig.”
Dit was ronde, duidelijke, Oud-Hollandsche taal. En had de

Engelsche wolf niet zoo’n honger gehad, dan had hij ’t er misschien
bij laten zitten.
Doch nù was er geen denken aan.
Geen twee maanden later (1841) verscheen een nieuw dokument

van den Kaapschen gouverneur, luidende: „Aangezien de Volksraad
der Emigranten-Boeren, nu wonende te Port-Natal en aangrenzend
gebied, ons hebben bekend gemaakt, dat zij hadden opgehouden,
Britsche onderdanen te zijn, zoo proclameeren wij, dat die
onafhankelijkheid in geenen deele zal worden erkend; dat de
bewoners onderdanen en kolonisten zijn van Groot-Brittanje, en dat
wij onverwijld militair bezit van Natal zullen nemen, door derwaarts
eene afdeeling te zenden van Harer Majesteits troepen.”
Maar nu barstte de verontwaardiging bij de Boeren los, en zij

antwoorden: „Wij weten, dat er een God leeft, Die hemel en aarde
regeert, en Die Machtig en gewillig is, om den verongelijkte, hoewel
zwakke, tegen geweldenaars te beschermen. Op hem en op de
rechtvaardigheid onzer zaak verlaten wij ons, en zoo het Zijn wil is,
dat eene algeheele verwoesting worde gebracht over ons, onze
vrouwen en kinderen, en alles, wat wij hebben of bezitten, zullen wij
onderworpen zijn, en erkennen, zulks bij Hèm te hebben verdiend
maar niet bij de mènschen. Wij zijn bekend met de macht van Groot-
Brittanje, en het is ons doelwit geenszins, om die macht te
trotseeren, doch wij kunnen te gelijkertijd evenmin toelaten, dat
geweld inplaats van recht [200]over ons zou zegevieren, zonder dat
wij al onze pogingen zullen hebben aangewend, om zoodanig
geweld tegen te gaan.”
De gouverneur van de Kaapkolonie glimlachte even, toen hij dit

schrijven las, en gaf onmiddellijk bevel aan majoor Smith, om zijn
kamp in Pondo-land op te breken en in ijlmarschen op Natal aan te
trekken.
Aan zoo’n tocht, met een trein van wagens en kanonnen, waren
groote moeilijkheden verbonden, doch majoor Smith kwam alle
zwarigheden te boven, en was in zeven weken tijds tot de Natalbaai
doorgedrongen.
De Boeren waren door die plotselinge nadering inderdaad verrast,

en zelfs hun kundige generaal Pretorius had niet vermoed, dat de
vijand van dièn kant zou gekomen zijn.
De Engelsche majoor maakte intusschen van deze verrassing
gebruik, om op eenigen afstand van de havenplaats Durban—in den
vorm van een driehoek—zijn kamp op te slaan. Op elk punt werd
een kanon geplant, en terwijl de vlag der Boeren werd neergehaald,
wapperde de Engelsche hoog in de lucht.
Nu had de majoor de goedheid, om aan de Boeren een termijn van

vijftien dagen toe te staan voor hunne onderwerping. Anders zouden
zij als muiters worden beschouwd en de volle gestrengheid der wet
ondervinden.
Bijna terzelfder tijd brachten de brik „Pilot” en de schoener

„Mazeppa” nog twee kanonnen met eene groote hoeveelheid
mondbehoeften en ammunitie, en aan een zandigen uithoek bij
Durban, de „Point” genoemd, werd het aangebrachte opgeslagen.
Majoor Smith plaatste er een wacht naast van een sergeant en
vijfentwintig man, stak vervolgens zijn fijnste sigaar op, en zeide
vergenoegd tot zijn officieren: „Nu zullen jelui eens zien, hoe gauw
die koppige Boeren om genade zullen smeeken!”
Maar de Boeren liepen niet hard; ten minste niet, om genade te

smeeken.
Wel was er onder de Afrikaansche Boeren kaf onder het koren,

wijfelaars en wankelmoedigen, voornamelijk schuilende onder de
Emigranten, die pas een jaar geleden, nìet om de staatkundige
vrijheid maar om een ruimer stuk brood, uit de Kaapkolonie waren
gekomen, doch onder de echte Voortrekkers, den kern der
bevolking, was geen weifelaar.
Oogenblikkelijk riep de Volksraad alle beschikbare manschappen op,

en als een dreigende donderwolk legerde zich [201]Pretorius met zijn
ruiters, waarbij zich Teunis de leeuwenjager, Tijs de Jong, de twee
zonen van Gert Kloppers en de beide zonen van Barend Jansen
bevonden, op drie mijlen afstands van het Engelsche kamp.
Pretorius begon de vijandelijkheden met de ossen der Engelschen

weg te nemen, doch majoor Smith glimlachte, toen hij dit hoorde.
„Laat die domme boeren maar begaan,” zeide hij. „Wij krijgen de
ossen terug, en de Boeren toe.”
Reeds den volgenden nacht zou dit kunststuk worden uitgevoerd.
In het holle van den nacht brak de majoor met zijn manschappen en
twee kanonnen op, om het Boerenlager bij verrassing te nemen, en
om zóó—met éénen slag—aan de zoogenaamde muiterij een einde
te maken.
Het was een stille, liefelijke nacht. Fluisterend gaven de officieren de

kommando’s. Niets werd gehoord dan de dreunende stap der
infanterie, de gedempte hoefslag van het paard in het lange gras,
het gekraak der kanonwagens, de kreet van een wilden baviaan en
het ruischen van den wind in het loover van het woud. Slechts dit
woud scheidde nog de snel avanceerende Engelschen van het lager
der Boeren.
Dat lager lag in de diepste rust. Snelvoetige Zoeloekaffers brachten

den majoor de welkome tijding.
„Ja, zoo zijn de Boeren,” dacht de majoor; „dom—oliedom!”
„Tegen de dikhuidige, met vet en traan ingesmeerde kaffers zijn ze

wel bestand, maar het vechten tegen den Engelschman is toch nog
iets anders—dat zullen ze van nacht gewaar worden!”
„Voorwaarts, jongens,” zeide Smith; „gauw door dit bosch heen, en

dan het Boerenkamp genomen! Ge laat niet éénen Boer ontsnappen
—ik moet ze allemaal hebben—de verrassing zal volkomen zijn—
voorwaarts!”
Maar waarom deinzen de soldaten plotseling achteruit, alsof zij op

vergiftige slangen hebben getrapt? Waarom slaan de ossen, voor de
kanonwagens gespannen, wild op de vlucht? Waarom springt de
majoor met uitgetrokken sabel, vloekend en dreigend, voor het front
zijner wankelende gelederen?
Waarom?—maar ge behoeft het niet te vragen. Door het duister van

den nacht ziet ge den vuurstraal glippen uit het lange roer der
Boeren, die achter het geboomte in hinderlaag [202]liggend, den
vijand hebben opgewacht, totdat hij onder schot zou komen.
Majoor Smith had het wel bij het rechte eind gehad, dat de
verrassing volkomen zou zijn, doch zij was niet aan den kant der
Boeren.
Met huiveringwekkende juistheid sloegen de kogels in de Engelsche

gelederen, en de verwarring werd algemeen. Al sterker drongen de
Boeren op. „Hier heen!” riep Dirk Kloppers met luide stem; „dáár zijn
de kanonnen!” In een stouten aanloop werden ze genomen, doch
Kloppers viel en kleurde met zijn heldenbloed den grond van Natal.
Majoor Smith begon intusschen te begrijpen, wat voor vleesch hij in

de kuip had. Met het overschot van zijn gehavend legertje vluchtte
hij naar zijn verlaten kamp, woedend, dat die „domme” Boeren hem
te gauw waren afgeweest.
Maar de voortvarende Pretorius liet er geen gras over groeien.

„Kom,” zeide hij tot zijn mannen, „die levensmiddelen en die
ammunitie daar aan de „Point” kunnen wij gebruiken.”
Met honderd Boeren trok hij naar de „Point”, waar de sergeant met
zijn vijfentwintig soldaten nog steeds de wacht hield.
„Geef u over,” liet Pretorius aan den sergeant zeggen.
„Neen,” antwoordde de sergeant, „dat doe ik niet.”
„En waarom niet?” liet Pretorius vragen.
„Omdat zulks tegen de eer van Engeland is,” antwoordde de

sergeant.
„Maar dan word jij met al je soldaten dood geschoten,” liet Pretorius
zeggen.
„Dat hindert niet; dan is de eer van Engeland gered,” antwoordde de

sergeant, „en wij schieten ook niet met erwten.”
Nu moesten de Boeren al weer aan ’t vechten, maar toen zij twee

soldaten hadden gewond en twee andere doodgeschoten, zeide de
sergeant: „Zie zoo; nu is aan de eer voldaan,” en hij gaf zich over.
Een rijke buit aan levensmiddelen en ammunitie viel de Boeren in

handen, en terwijl zij wagenvrachten vol goederen doorzonden naar
Pieter-Maritzburg, hun hoofdstad, was de ammunitie zeer geschikt,
om majoor Smith uit zijn eigene kanonnen te bestoken.
Tevens legde Pretorius beslag op de schepen de „Pilot,” en de

„Mazeppa,” en nogmaals ging de vlag der Boeren zegevierend naar
de steng.
Van alle kanten werd majoor Smith nu door de Boeren

[203]ingesloten, maar hij liet hooge, aarden verschansingen
opwerpen, en dekte zich daarachter als een bunzing in zijn hol.
Zoo doende was hij beveiligd tegen het vuur der Boeren, maar
Pretorius zeide: „Wij zullen den bunzing door den honger uit zijn hol
drijven.”
Smith lachte, toen hij dit hoorde, maar de mondvoorraad begon toch
allengs te slinken.
Toen kwam een Engelsch koopman in Durban op de gedachte, om

zijne in ’t nauw komende landgenooten te helpen, en hij trachtte een
koppel ossen het kamp binnen te smokkelen. Doch de belegeraars
roken lont, en de list mislukte. En om ook voor het vervolg van hen
geen last te hebben, liet Pretorius de Engelsche ingezetenen van
Durban naar Pieter-Maritzburg verhuizen en legde beslag op hun
goed. Nu begon het meenens te worden; majoor Smith lachte niet
meer.
Al kleiner werden de porties gedroogd paardenvleesch, en al brakker

werd het water uit de gegraven put.
Wel deden de Engelschen verscheidene wanhopige uitvallen, om

zich door den waakzamen vijand heen te slaan, doch telkenmale
werden zij met bebloede koppen naar huis terug gestuurd.
Doch in dezen grooten nood daagde er redding op in de gedaante

van een jongen Engelschman, met name Richard King. „Ik red het
Kamp,” zeide hij, en—hij kreeg het gedaan.
De waakzaamheid der Boeren verschalkend, wist hij tusschen hunne

schildwachten door te sluipen, en voorzien van dépêches van
majoor Smith, aanvaardde hij een tocht van over de vierhonderd
mijlen, om die dépêches te overhandigen aan den bevelhebber der
Engelsche troepen in Grahamstown.
Door volle rivieren en langs stroopende Kafferbenden moest hij
heen, doch niets en niemand kon den taaien en onverschrokken
Engelschman keeren. In nauwelijks negen dagen volbracht hij den
gevaarvollen tocht en meldde zich, hongerig en afgebeuld, aan bij
den Engelschen generaal.
Onmiddellijk werd een afdeeling grenadiers met de „Conch” naar

Natal verscheept, gevolgd door alle beschikbare troepen op het
oorlogsschip de „Southampton”.
Een dag voor de „Southampton” liet de „Conch” het anker vallen op

de reede van Port-Natal, en den volgenden nacht verkondigden de
hoog opstijgende Engelsche vuurpijlen aan majoor Smith, dat de
hulp nabij was. [204]
J. A. Cloete, een geboren Afrikaander, doch kolonel in Engelschen

dienst, mag aanspraak maken op de eer en—de schande, Engeland
aan Natal te hebben geholpen.
Op Zondag 26 Juni 1842 bewerkstelligde hij de landing der troepen.

Met bange zorgen op het schrandere voorhoofd snelde Pretorius,
het beleg van het Engelsche kamp opbrekend, naar de Baai, om die
landing te keeren.
Doch te vergeefs was de moed en de doodsverachting, waarmede

zijn Boeren streden!
De troepen waren volkomen gedekt door het vèr dragend geschut

der „Southampton”, en de ammunitie der Boeren raakte op. Afgemat
en totaal uitgeput trokken zij zich terug. Toorn, smart en droefheid
spraken uit hun oogen.
Majoor Smith was ontzet, en donkerder dan ooit was de

staatkundige hemel.

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Fundamentals of Investments Valuation and Management

Fundamentals of Investments 8th Edition Jordan Test

Fundamentals of Investments 6th Edition Jordan Test

Fundamentals of Investments 6th Edition Jordan

Fundamentals of Investments 3rd Edition Alexander Test

Fundamentals of Management 7th Edition Griffin Test

Analysis of Investments and Management of Portfolios

Behavioral Finance and the Psychology of Investing

Multiple Choice Questions

2. Which one of the following is the basis for prospect theory?

A. Investors react differently to prospective gains and losses.

3. Which one of the following defines frame dependence?

A. Investors react differently to prospective gains and losses.

A. prior day's market value.

5. Loss aversion is defined as:

A. the inability to mentally acknowledge a loss on a security.

6. Representativeness heuristic is best explained as:

10. Which one of the following best describes heuristics?

A. noise trading bounds

13. Which one of the following risks is related to irrational beliefs?

A. eight-week repetitive trading patterns

20. Prospect theory is based on the concept that investors are:

A. always risk takers.

23. Investors tend to make better decisions when looking at a decision:

A. based on historical performance.

A. associating a security's gains or losses based on its purchase price

A. law of small numbers.

A. gravitate to their long-term average rates of return.

37. Which one of the following is a characteristic of the self-attribution bias?

A. believing what you wish to believe

A. to measure the level of investor optimism and pessimism

A. a breakout of a resistance level

A. The market is approaching the lowest level that is reasonably expected.

I. flat advance/decline line

A. DJIA ended the day up 32 basis points.

52. A "block trade" is a trade in excess of how many shares?

A. reversals from the main trend line.

A. The outside of the right shoulder is a bullish signal.

A. The 50-day moving average is bullish.

58. Bollinger bands:

A. graphically reflect the differences between two moving averages.

A. relatively close to each other.

I. last trade price

A. are all odd numbers of increasing value.

64. Some technical analysts use Fibonacci numbers to predict:

A. primary trend breakthroughs.

65. Which one of the following is seen as a bearish indicator?

A. decreased short selling

Multiple Choice Questions

See Section 8.1

Accessibility: Keyboard Navigation

2. Which one of the following is the basis for prospect theory?

A. Investors react differently to prospective gains and losses.

See Section 8.2

Accessibility: Keyboard Navigation