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Behavioral Finance Course Outline PHD 2012
Behavioral Finance Course Outline PHD 2012
Behavioral Finance Course Outline PHD 2012
Behavioral Finance
January 2012
JBS
Behavioral Finance
January 2012
identify and explain how psychological elements influence the manner in which investors construct portfolios, how corporate managers make decisions about capital budgeting and capital structure, and how market prices reflect investor sentiment.
5. Text Book: Ackert and Deaves, Behavioural Finance, Cengage. 6. Additional Readings and References: 1. Joachim Goldberg, Rdiger von Nitzsch, Behavioral Finance ,Wiley. 2. Lars Tvede, The Psychology of Finance: Understanding the Behavioural Dynamics of Markets, Revised Edition, Wiley. 3. Andrei Shleifer, Inefficient Markets:An Introduction to Behavioral Finance, Oxford. 4. Hersh Shefrin, Beyond Greed and Fear:Understanding Behavioral Finance and the Psychology of Investing, Oxford. 5. Melvin Lax, Wei Cai and Min Xu, Random Processes in Physics and Finance, Oxford. 7. Evaluation Details S. No. Components 1 Assignments 2 Mid-Term Exam 4 End-Term Exam
7.1 Individual Assignments (3x10=30%) Each student will be given three assignments, 10 marks each, to submit on or before deadline for evaluation. 7.2Mid-Term Exam (30%) Mid-Term Exam will be based on class discussion, lectures, power points and assigned chapters in the textbook. This will be a Open book problem solving questions 7.3 End-Term Exam (40%) End-Term Exam will be at the end of the trimester and will cover the entire course. This will also be a Open book test on application based real life questions/ problem(s)/ Case(s). 8. Pedagogy The course will involve a healthy balance of lecture and classroom discussion and case discussions on each module. The students must come to class fully prepared having read the text materials and case studies indicated in the session plan.
JBS
Behavioral Finance
January 2012
9. Teaching Plan:
Sessions
1-4
Topics
Conventional Finance: Foundation of Finance I: Expected Utility Theory Foundation of Finance II: Asset Pricing, Market Efficiency, and Agency Relationship Prospect Theory, Farming, and Mental Accounting Challenges to Market Efficiency Behavioral Science Foundations: Heuristics and Biases Overconfidence Emotional Foundation Investor Behavior: Implications of Heuristics and Biases for Financial Decision-Making Implication of Overconfidence for Financial Decision-Making Individual Investors and the Force of Emotion Social Forces: Social Forces: Selfishness or Altruism? Social Forces at Work: The Collapse of an American Corporation Market Outcomes: Behavioral Explanations for Anomalies Do Behavioral Factors Explain Stock Market Puzzles? Corporate Finance: Rational Manager and Irrational Investors Behavioral Corporate Finance and Managerial Decision-Making
5-8
9-12
13-14
15-17
18-20