UGBA 135 post midterm material UPDATED ACTUAL Questions And Correct
Answers
Suppose you have a 15-year-old roof that was originally The insurance company will pay ½ or less of the cost of replacing your destroyed
rated for 25 years and you have cash value coverage on roof (minus your deductible) because you've already benefited from 60% of the
your homeowners insurance. If your roof is destroyed in useful life of the roof.
fire and needs to be replaced which of the following is
true?
Which of the following makes renting more appealing Higher interest rate on mortgage
versus buying?
Landlords can require tenants to have renters insurance. true
One good way to lower your home homeowners False
insurance premiums is to insure your house for less than it
is worth.
All risks homeowners policies cover all risks. False
Named risk policies are usually less expensive than all True
risks policies.
If a policy has guaranteed replacement cost for your False
home then it will always have guaranteed replacement
cost for your property.
Suppose your roommate slips on the rug in your Will pay nothing
apartment, falls, and breaks her arm. She has medical
costs and she losses two weeks wages because she can't
work. What will renters insurance pay for (if you have it)?
Overconfident traders tend to Trade more frequently
In a study of individual investors with accounts at a The stocks the investors bought underperformed the stocks they sold by an
discount brokerage firm, Professor Odean compared the average of about 3 percentage points before accounting for the costs of
performance of stocks the investors bought to those they commissions.
sold over the 12 months following the transaction. He
found:
In a study of men and women who were investors at a Men traded more actively than women and underperformed a buy-and-hold
discount brokerage, Professor Odean and his co-author strategy
Brad Barber found:
Which of the following is an example of moral hazard? A woman leaves her expensive diamond earrings on the night stand at a cheap
hotel because she knows the earrings are insured.
, Which of the following is an example of adverse A young man who has does not have health insurance finds out that he needs to
selection? have expensive medically necessary surgery in the next year, therefore he signs
up for health insurance at the next open enrollment period (i.e., the next
opportunity).
Which of the following is an example of correlated risks? Many houses being damaged in the same earthquake.
It is a good idea to always buy extended warranties for False
small appliances.
Most people have a better intuitive grasp of probability False
than of quantities.
In the study of Taiwanese individual investors discussed in Poor advice from financial advisors
the videos, which of the following was not given as a
reason why Taiwanese individual investors as a group
underperform in the stock market:
Professor Odean and his co-author Brad Barber found False
that over a 10-year period more actively managed mutual
funds outperformed the market than one would expect if
each fund had a 50-50 chance of doing so each year.
According to one class video, over half of the new True
money flowing into mutual funds each year goes to the
funds in the top 20% for performance the previous year.
Relative to their opportunities, most individual investors False
are more likely to sell as stock that has gone down in
value since they bought it than a stock that has gone up.
Individual investors tend to be on the buy side of the True
market for stocks that catch their attention.
At the end of a car lease, if you return the car to the False
leasing company you cannot be charged for tears,
scratches, and dents.
Car leases are complicated and often contain hidden True
fees.
At the end of a car lease, if you return the car to the True
leasing company with more than the annual mileage limit,
you may be charged as much as 20 cents a mile for the
extra miles.
A good rule of thumb for auto insurance is to insure your False
car for the minimum limits required in your state.
To save money on auto insurance, Professor Odean False
recommends that you reduce your liability coverage.
Answers
Suppose you have a 15-year-old roof that was originally The insurance company will pay ½ or less of the cost of replacing your destroyed
rated for 25 years and you have cash value coverage on roof (minus your deductible) because you've already benefited from 60% of the
your homeowners insurance. If your roof is destroyed in useful life of the roof.
fire and needs to be replaced which of the following is
true?
Which of the following makes renting more appealing Higher interest rate on mortgage
versus buying?
Landlords can require tenants to have renters insurance. true
One good way to lower your home homeowners False
insurance premiums is to insure your house for less than it
is worth.
All risks homeowners policies cover all risks. False
Named risk policies are usually less expensive than all True
risks policies.
If a policy has guaranteed replacement cost for your False
home then it will always have guaranteed replacement
cost for your property.
Suppose your roommate slips on the rug in your Will pay nothing
apartment, falls, and breaks her arm. She has medical
costs and she losses two weeks wages because she can't
work. What will renters insurance pay for (if you have it)?
Overconfident traders tend to Trade more frequently
In a study of individual investors with accounts at a The stocks the investors bought underperformed the stocks they sold by an
discount brokerage firm, Professor Odean compared the average of about 3 percentage points before accounting for the costs of
performance of stocks the investors bought to those they commissions.
sold over the 12 months following the transaction. He
found:
In a study of men and women who were investors at a Men traded more actively than women and underperformed a buy-and-hold
discount brokerage, Professor Odean and his co-author strategy
Brad Barber found:
Which of the following is an example of moral hazard? A woman leaves her expensive diamond earrings on the night stand at a cheap
hotel because she knows the earrings are insured.
, Which of the following is an example of adverse A young man who has does not have health insurance finds out that he needs to
selection? have expensive medically necessary surgery in the next year, therefore he signs
up for health insurance at the next open enrollment period (i.e., the next
opportunity).
Which of the following is an example of correlated risks? Many houses being damaged in the same earthquake.
It is a good idea to always buy extended warranties for False
small appliances.
Most people have a better intuitive grasp of probability False
than of quantities.
In the study of Taiwanese individual investors discussed in Poor advice from financial advisors
the videos, which of the following was not given as a
reason why Taiwanese individual investors as a group
underperform in the stock market:
Professor Odean and his co-author Brad Barber found False
that over a 10-year period more actively managed mutual
funds outperformed the market than one would expect if
each fund had a 50-50 chance of doing so each year.
According to one class video, over half of the new True
money flowing into mutual funds each year goes to the
funds in the top 20% for performance the previous year.
Relative to their opportunities, most individual investors False
are more likely to sell as stock that has gone down in
value since they bought it than a stock that has gone up.
Individual investors tend to be on the buy side of the True
market for stocks that catch their attention.
At the end of a car lease, if you return the car to the False
leasing company you cannot be charged for tears,
scratches, and dents.
Car leases are complicated and often contain hidden True
fees.
At the end of a car lease, if you return the car to the True
leasing company with more than the annual mileage limit,
you may be charged as much as 20 cents a mile for the
extra miles.
A good rule of thumb for auto insurance is to insure your False
car for the minimum limits required in your state.
To save money on auto insurance, Professor Odean False
recommends that you reduce your liability coverage.
