[h] HS300 – Module 2
[q] Three Main Approaches to Counseling
[a] Main approaches:
[q] Developmental Approach
[a] An approach to counseling that is based on the theory that human development occurs in predictable stages. It suggests that disruptions at a particular stage of development results in predictable problems and behavior.
[q] Humanistic Approach
[a] An approach to counseling that is based on philosophical theory. Proper mental health is defined as having congruent and aligned thoughts, feelings and behaviors. Treatment goals are centered on self-reflection.
[q] Cognitive-Behavioral Approach
[a] An approach to counseling that focuses on identifying aspects of one’s surroundings that are unhealthy and could be changed.
[q] Elements of an Effective Communication Strategy
Active vs. passive listening.
Client learning styles.
Types of questions.
[q] Active Listening
[a] A type of listening that requires undivided attention and dedicated concentration. Involves paraphrasing what the speaker is saying and asking follow-up questions.
[q] Passive Listening
[a] A type of listening in which communication rests entirely on the speaker talking while another person listens. Occurs during seminars, educational settings, social gatherings, and sermons.
[q] Two Main Learning Styles
[a] Main styles:
[q] Visual Learners
[a] Learners that respond well to charts, graphs, and other visual aids. These type of learners account for 65% of the population.
[q] Verbal/auditory Learners
[a] Learners that focus their attention on every spoken word.
[q] Nonverbal Communication
[a] Cues that include body language, facial expressions, and voice tone or pitch.
[q] Open-ended Questions
[a] Questions that allow someone to give a free-form answer. A key type of question that can be used to learn about a client’s goals. However, may put the client in a defensive position.
[q] Closed Questions
[a] Questions that require a very specific response. Commonly involves an answer that can be accomplished with a single word or two.
[q] Traditional Finance Theory
[a] A theory of finance, also known as Modern Portfolio Theory, that is based on:
The idea that investors are perfectly rational.
The idea that markets are efficient.
Mean-Variance Portfolio Theory and the Capital Asset Pricing Model.
The idea that Beta can be used to judge volatility of an investment.
[q] Efficient Markets
[a] A theory of finance that refers to how well prices reflect all available information.
[q] Mean-Variance Portfolio Theory
[a] A theory of finance that indicates assets are priced appropriately given their risk and expected returns.
[a] Measures the extent to which a change in the overall marketplace can affect a particular asset. Represents market risk of a security. Used in the capital asset pricing model.
[q] Behavioral Finance Theory
[a] The study of the effects of psychology on investors and financial markets.
[q] Assumptions of Behavioral Finance Theory
Investors are sometimes irrational.
Markets are not efficient.
Behavioral portfolio theory governs.
Risk alone does not determine returns.
[a] A type of cognitive bias that refers to the act of attaching one’s thoughts to a reference point.
[q] Confirmation Bias
[a] A type of cognitive bias in which people tend to filter information and focus on information supporting their opinions.
[q] Hindsight Bias
[a] A type of cognitive bias in which one becomes convinced they accurately predicted an event before it occurred.
[q] Overreaction Bias
[a] A type of cognitive bias that involves an extreme emotional response to new information. Often led either by greed or fear.
[a] A type of cognitive bias in which individuals determine the probability of an occurrence based on its apparent relationship with an event existing in their mind.
[a] A type of emotional bias that stems from people’s desire to conform or be accepted by a certain group.
[q] Overconfidence Bias
[a] A type of emotional bias that occurs when an investor over weights their own skills or research capabilities.
[q] Prospect Theory
[a] A theory of behavioral finance that suggests people value gains and losses differently and will base their decisions on perceived gains rather than perceived losses.
[a] An element of prospect theory that indicates investment decisions can be influenced by how the decision is framed.
[q] Disposition Effect
[a] An anomaly discovered in behavioral finance that relates to the tendency of investors to sell assets that have increased in value, while keeping assets that have dropped in value.
[q] Capital Asset Pricing Model
[a] A model that describes the relationship between market (systematic) risk and expected return for assets, particularly stocks. Predicts the expected return of an investment based on beta (relative risk to the market).
[q] Behavioral Asset Pricing Model
[a] A model that predicts the return of an asset based on market risk, as well as:
Market capitalization ratios.
Social responsibility factors.
[q] Risk Capacity
[a] The amount of risk an investor can take.
[q] Risk Tolerance
[a] The amount of risk an investor is willing to take.