BEHAVIOURA

FINANCE
AssiGNMENT NO 01

SUAMITTED TOMs. Mouzm Daah

SuBMITTED BY ANuTA PRIVADARSINI

MoHANT
Rpn NO1906102010
MBA, Sec C
 What efficinyhe form of Considemeol
ohe EMH Cm he basis of tha +po of
ntorcncton avai lable o He inancial maurcKat 2
Ans
Eciont MarketHpothesis (EMH)S
E ugen Fama (1466) defimed EPtGent mar (as
Euene
of
A
A martket ohene here arce arge numbert
Cationcel prnofi+ maximises acti vely Comp HTA
martke
wtw each ring to pnedict uutterte2
whertte

values o4 indiviclual Seceuri ties, ancl

(utren+ imforumatiom rre e
is alnos+re
Cmporttant
avaslable to all partHcpants.

fotms of etficienci es Consielere

here Cert e 3
P e ot tm#ob-
he basis of
oy e EMH 0
imanial mcereket
ftmatH om
avarlable n
mese arte as Aolos'

Weak fortm
hcet tucloy's Stock
he
h e wecak forum 8uggS+s
Prci ces teftec al ue clata of pas+ prucez3
and mat no forcm o +echnical anatei Can be
aid nvesto r e n
effecaève Lt?lized to
ttading decisicmg.
mcellirng

JCO Sem Stenq

theoru folocOS
he semi S+tcon eficiency
me belêet hat loeCcause all mfortmatom
tncet s public s cesed in e Calctulasi cn of
 a8tocks CLertmeN+ price cnvestHorg Ceennot+

t üze ether technical or nocem en+ed

rtotturens
conaluygis to qoin wignere

mcertkeA
subscrcibers O -is t i eve
heory eeli
he
The
OmLu
Cmfortmaic)
ha is no+
tead
o Hhe pubuç Can hetP
avai e pertferuman ce leve
tetuttng te
bovs+ he rr
mcertKOt.
alove of e qeneeal

CD Stona
0f EMH 8+ecte3s hat al
he Sttong ortm to
mfortmaticom avaiLabla
cOfertmation- bow he
-is
and any not publicl4 noon
he pubic Sto Ck
sto C k
Ceerertent
CLccounted kort èn
CompleL (ntormati on
cencd herta is no upe o f
Prtlces advconteqe oO
an
hat Can give an icvegtort

he m aitk et.
.2 What fs the prractical applicatio of-he
expected uuty theory ?

AnsExpecHed U4?y haor

estHmates he
J4is a lheory in economi (S hat
he
outCome in
tn
af acticn tolen
tit an

0+ ooluise3 choosing he act tnO

un
cerctain .

event wm he mcximum expecteol

expectRol

oftme expected uuiUA

Soma
Some rtacti ca appucaions

heorte
( Puubic 2 Economic Poli
as
EUT finds application m public poliuy h a t mcxi m
mextmi
hat he social arttangementhat
explains mos+

Society ts
Hhe
Zes t e totcel1 welfare actoss
micrtomort
he Concep4 04
socia
SoaaY rqut
EUT
arcttaungemen+

salsoo useg
policies. The
artea
heat
+ also us ecl + quicde Coeleelate tis
i kkg
g
iLses EUT e CcelctelaBe
sales
ofingutt ance 1mg terem
fincenci cel gain n
wh g e a l of

)Ehics
mcy heu i maling
ulityheory
h e epecAad 0
decisiong when he Consequences
vercsiu) OF
m
become uncettcin .
h e comsequentialis
morta
is a

matimizrng the expecteo wtiüty

Choice
 .3 Whak clo
you mear
by Rohonalt n
market
inandal

Ans
Ralionaity Can mean has aqents rt2ceive no
enfortmaticn Se as to uplate heere b eliofs
Cortnect Based on heir beliets, n
4ans
t s meke
choic es abott Seturities hec aree norun attvelu
accepteble
Rcctimal behaviourr nefercg o a clecislon
mcekin
mcekina prtoces f.e. baseol 0m making Choires
ha Testut+ in 4he optimal Level oB benefits
Ort
utr tet cen im civicdual

Explain hou bohawiourtal finande volveol?

Benavioureal Finance is a comcept blevclopeol

Hs field o£
04
tak en from h e
wh he impus
t+o ondertsHeund
endertgteund
and 4imance. H t u e s
pycholcqical 8tock
8tock M o r t k e to
MoLrtket
Aecto r s îm
Some vutious Puzelino
8ame.
&eLme
ort h e
04fe bettete explanatic)
onuence 0f
is defimed Hhe 8tudy of Ahe
1+ as
auets Pice .

teuctorca on an
Coclal pyehslogical
namoIea
+ seesHe rcsk od S+eck martkot
of Vcurtious
VctuoUg
ho wit explenatlon
wuch jus+ety
biases the inveLAore hag Conile tacing mve3tman
ating

decisims
 The discipliu of finance unclerr wen+ ttapted
developm ent wndet 1tt centu, the
Portfoelio
tuor Cap?tal asset prdciny -theory, tffi ient
murtket hpoheses Cend otere Simiuarr dinancal

Ptayeol a Signiicant rtoe im Hls

elevelopment These HmoTciesbrto ugt m an objective

Preogpectve to fimance anel ehabled expreseng

4 imdividual investmant+ prtefertences in
quoenti+attve, rtativnal and oqe cal
Ctermaiah Cal
eremgs
Ae pert Hhe heorues and te mo om t+ is 9smeA

hct incdivicduals maole TCCHOnal Prreferr enceg

LOule mating mvegment oleci sions. m i Prtinuple
8tee of ttadli-
of tcaicmalite to rems he (ortne
4ional finanre
The Crilicigm arce n a t hwmans as Sodal
Soual ben
ben

om to
has un ique v cuLu eshat may prtomp+
Hher emotimng
make deisloms in accortdañ ce wR+
and behavioer and no jus+ n he b u of objeckve
fecton
This
T u i creiicism 1led e e evoludien on 4 orf-
discipmaruy Science Called behavi ourcal i n ance.
Tuisbrtouantt neto perts pecveg h a t attempted

40 unause hose Qspects, ike bahawi oucs cind

moocl S+eutes df Ccmclivicals, t h a t imfuencd e
modcl
nVRs+ment olecisjomg
Ase, AttaclitigM cel nan ce had oo many anomaleg
and werte incapabte of
Captuuñy mpertteen+
#ucuations. The ned ecomomic Comditls i
h e iLOS also Suitteod he fecus of Cucacdemie

dis udms awa frcom ecomomldetuc analyses

Of tume cerùe3 o prtices , dividendg cund
tow cucds ne olev olopinq moclets o huma

rrelateol to timancial nmutkets.

Pgcho loa as

cevelopment+ hat
i s in h e liqut 0f hese
behawieurtal inanre enersol.