INTRODUCTION TO BEHAVIOURAL FINANCE

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Gissmol Mary
BVoc Banking & Financial Services
₹1,000.00
  • 99 students
  • 5 lessons
  • 0 quizzes
  • 10 week duration
99 students

INTRODUCTION TO BEHAVIOURAL FINANCE

Portfolio Theory, Capital Asset Pricing Theory, Efficient Market Hypothesis and similar other theories in the disciple of finance brought an objective perspective to finance and enabled expressing of individual investment preferences in mathematical, quantitative, rational and logical terms. As per these theories and models, is is assumed that individuals made rational preferences while making investment decisions. This principle of rationality formed the conerstone  of traditional finance. However, these assumptions of traditional finance have been criticized from the very beginning which was on the ground that human as social beings have unique values and make decisions in accordance with their emotions and behaviour. These criticisms led to the evolution of an interdisciplinary science called Behavioural Finance.

Behavioural finance is an area of study focused on how psychological influences can affect market outcomes. Behavioural finance can be analyzed to understand different outcomes across a variety of sectors and industries. One of the key aspects of behavioural finance studies is the influence of psychological biases.

COURSE CODE : BFSC403

SEMESTER : IV

DEPARTMENT: B.VOC BANKING AND FINANCIAL SERVICES

COURSE OBJECTIVES

  1. To make students understand the concept of behavioural finance
  2. To make students understand its evolution and theories
  3. To make the students aware of various biases that influences decision making process.

LEARNING OUTCOME

The students will be able to understand the traditional and behavioural finance perspectives on investor decision making. This paper discusses the effect that cognitive limitations and bounded rationality may have on investment decision making. It also compares traditional and behavioural finance perspectives on portfolio construction and the behaviour of capital markets. Thus, students get an understanding of human psychology on investment decisions.

SYLLABUS

MODULE I           Behaviour and Decision Making
MODULE II          Evolution of Behavioural Finance
MODULE III        Financial Market Anomalies
MODULE IV        Theories of Behavioural Finance
MODULE V          The Way Forward

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₹1,000.00