Q1. Andirah Wang is a new client of Willowtree Investment Advisors (Willowtree). As part of her initial meeting with her advisor, Anita Reinholt, CFA, Wang completed a questionnaire designed to profile her personality type. The results indicated that she is a person who has a conservative investing nature, but is confident in her own ability to research investment options in a careful, systematic manner.

Reinholt believes in modern portfolio theory (MPT), but after years of experience knows that an individual’s investment preferences and decisions are not always congruent with MPT. She has become increasingly interested in the tenets of behavioral finance theory in hopes that it will help her understand each client’s motivations and biases. When meeting with prospects or clients, she is careful to document comments and observations relative to the portfolio management process. Reinholt recorded the following statements made by Wang during the initial consultation:

1.       "I use the "basket" theory of investing - I don't want to put all my assets in one place so I'll give you a try with about 20% of my investment portfolio - that way I can see how you do relative to my other advisors."

2.       “I have been following Pharmitrol, a local company listed on NASDAQ. Several of my neighbors have production jobs there and are really optimistic about the firm’s prospects. Of course they’re not in management, but I think they should be able to sense what’s going on. I have a significant position now at $3.50 per share and expect to triple my investment soon.”

Reinholt is considering the appropriate risk and return objectives for Wang’s account. Wang said that she would like a “moderately aggressive” portfolio. Upon reviewing her balance sheet, however, Reinholt notes that Wang already has a significant allocation to a few high-risk securities. In addition she has some other illiquid and personal use assets, such as her residence, a time share condominium, and an interest in a local miniature golf course. Relative to her stated spending and retirement goals, her total net worth appears to not be adequate to meet those goals.

The analysis of Wang’s personality questionnaire indicates that she most likely is a:

A)   methodical investor.

B)   individualistic investor.

C)   cautious investor.

Q2. Statement 1 by Wang is reflective of which of the following basic principles of the behavioral finance investment framework?

A)   Asset segregation.

B)   Loss aversion.

C)   Asset integration.

Q3. The statement by Wang about Pharmitrol is most reflective of which of the following behavioral tendencies?

A)   Reference dependency.

B)   Anchoring.

C)   Overconfidence.

答案和详解如下：

Q1. Andirah Wang is a new client of Willowtree Investment Advisors (Willowtree). As part of her initial meeting with her advisor, Anita Reinholt, CFA, Wang completed a questionnaire designed to profile her personality type. The results indicated that she is a person who has a conservative investing nature, but is confident in her own ability to research investment options in a careful, systematic manner.

Reinholt believes in modern portfolio theory (MPT), but after years of experience knows that an individual’s investment preferences and decisions are not always congruent with MPT. She has become increasingly interested in the tenets of behavioral finance theory in hopes that it will help her understand each client’s motivations and biases. When meeting with prospects or clients, she is careful to document comments and observations relative to the portfolio management process. Reinholt recorded the following statements made by Wang during the initial consultation:

1.       "I use the "basket" theory of investing - I don't want to put all my assets in one place so I'll give you a try with about 20% of my investment portfolio - that way I can see how you do relative to my other advisors."

2.       “I have been following Pharmitrol, a local company listed on NASDAQ. Several of my neighbors have production jobs there and are really optimistic about the firm’s prospects. Of course they’re not in management, but I think they should be able to sense what’s going on. I have a significant position now at $3.50 per share and expect to triple my investment soon.”

Reinholt is considering the appropriate risk and return objectives for Wang’s account. Wang said that she would like a “moderately aggressive” portfolio. Upon reviewing her balance sheet, however, Reinholt notes that Wang already has a significant allocation to a few high-risk securities. In addition she has some other illiquid and personal use assets, such as her residence, a time share condominium, and an interest in a local miniature golf course. Relative to her stated spending and retirement goals, her total net worth appears to not be adequate to meet those goals.

The analysis of Wang’s personality questionnaire indicates that she most likely is a:

A)   methodical investor.

B)   individualistic investor.

C)   cautious investor.

Correct answer is A)

Wang’s systematic research, confidence in her own ability and conservative nature place her in the general category of methodical investors. Note that cautious investors are the most risk averse and that individualistic investors tend to be more aggressive.

Q2. Statement 1 by Wang is reflective of which of the following basic principles of the behavioral finance investment framework?

A)   Asset segregation.

B)   Loss aversion.

C)   Asset integration.

Correct answer is A)

Asset segregation is the tendency to evaluate a manager or investment in isolation instead of measuring the impact on the overall portfolio.

Q3. The statement by Wang about Pharmitrol is most reflective of which of the following behavioral tendencies?

A)   Reference dependency.

B)   Anchoring.

C)   Overconfidence.

Correct answer is C)         

Wang is overconfident about the information she has about Pharmitrol’s prospects. Reference dependency is related to the fear of regret and the concept of reference point. Investors often evaluate alternatives not in terms of final outcome, but in terms of gains and losses relative to an artificial reference point. Anchoring refers to the inability to fully incorporate (adjust) the impact of new information on projections.

Thank you!