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If the Federal Reserve sells securities, that reduces commercial banks’ capacity to lend.

The economic goals of the Federal Reserve include1. prosperity2. full employment3. stable prices

Even if technical analysis accurately predicted the direction of stock prices, commissions from frequent trading may consume any excess return the investor earns.

An increase in the targeted federal funds rate implies that the Fed is buying securities.

When the Federal Reserve seeks to expand the money supply, it

Behavioral finance explains dramatic price changes in securities markets as a tendency for investors to “herd.”

Acknowledging traits that affect investment behavior should lead to better investment decisions.

Being familiar with a company often results in individuals buying stock (e.g., buying the stock in the company for which they work).

Monetary policy affects securities prices by1. affecting investors’ required return2. increasing the federal deficit3. affecting firms’ capacity to generate earnings

A price increase on small volume is more bullish than a price increase on large volume since fewer investors bought the stock.