ACCT 632 Chapter 2- Interpersonal Communication and Behavioral Finance.

1.       Which of the following statements are true?
 

1. There has been a movement in recent times for the financial industry to be more in touch with psychology

 and sociology due to their effect and persuasiveness in financial matters.
2. There has been a movement in recent times for the financial industry to focus on asset prices and ignore

 psychology and sociology issues.
3. Behavioral Finance has nothing to do with issues concerning psychology and sociology.

A) 1 only.

Rationale
Behavioral Finance has, in recent times, brought more attention to the psychological and sociological aspects of individuals, markets and the financial industry.

B) 1 and 3.

C) None of the above.

D) All of the above.

2.       Which of the following is considered to be a counseling paradigm or school of thought?

A) Developmental.

B) Humanistic.

C) Cognitive-Behavioral.

D) All of the above.

Rationale
All of the above are counseling paradigms.

3.       Which of the following are consistent with the Humanistic Paradigm?
 

1. The majority of Humanistic theories view clients as experts on themselves.
2. The alliance between the counselor and client is extremely important for humanistic counselors and is the

 basis of the treatment or plan of action.
3. There needs to be a professional distance between the client and adviser where the adviser should stay

close to discussing numbers and data with the client.

A) 1 only.

B) 1 and 2.

Rationale
Statements 1 and 2 are key components to the Humanistic Paradigm discussed in the chapter. Statement 3 is incorrect because the Humanistic Paradigm embraces a close, friendly relation- ship between the client and adviser, such that the client will open up and achieve congruence.

C) 1 and 3.

D) All of the above.

4.       Which schools of thought for counseling could an adviser combine?

A) Developmental and Humanistic.

B) Humanistic and Cognitive-Behavioral.

C) Developmental and Cognitive-Behavioral.

D) All 3 schools of thought may be combined.

Rationale
It was discussed that there may be times that the client’s style may necessitate a change to a different school of thought or combination of any two, or all three. These are decisions that should be made by the adviser using his or her best judgment.
 

5.       Which of the following is NOT true in communicating with a client?

A) Posture means nothing.

Rationale
Posture has meaning and can be a nonverbal cue or sign in the communications process.

B) Good posture may indicate positive self-esteem.

C) Slouching may indicate less interest.

D) Uncrossed arms may indicate that one is relaxed and open.

6.       Which of the following is NOT a premise in Traditional Finance?

A) Markets are Efficient.

B) Investors are Rational.

C) Markets are Inefficient.

Rationale
Markets are inefficient is NOT a premise in Traditional Finance. The premise is Traditional Finance is just the opposite, that markets are efficient and stock prices are equal to the fundamental or intrinsic value of the stock.

D) Modern Portfolio Theory Governs.

7.       Which of the following are true about “why” questions?

1. While the “why” questions are tempting and may help understand the client’s motives, the “why”

 question may be ill-advised because it could have limited benefit for the client.
2. A “why” question could place the client in a position of having to justify what was done, and that could

 put the client in a defensive posture.
3. “Why” questions are always the best questions to ask.