Behavioral finance is the study of how psychology influences financial decision making. It argues that emotions and mental errors cause asset mispricing, rather than rational factors alone. Traditional finance assumes rational investors, while behavioral finance recognizes that investors exhibit heuristics, frame dependence, and emotional inefficiencies. Examples include prospect theory, mental accounting, and the disposition effect. Behavioral finance provides a more realistic and explanatory view of actual investor behavior compared to traditional finance assumptions.
Behavioral finance and investment decisionaashima1806
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Behavioral Finance is all related to the behavior of the investor at the time of investing in different market conditions.. same is exhibited in our presentation by compiling different questions related to investment for different investors on the basis of different age groups...
Behavioral finance and investment decisionaashima1806
Β
Behavioral Finance is all related to the behavior of the investor at the time of investing in different market conditions.. same is exhibited in our presentation by compiling different questions related to investment for different investors on the basis of different age groups...
Abstract
The idea of an Efficient Market first came from the French mathematician Louis Bachelier in 1900: « The theory of speculation ».
Bachelier argued that there is no useful information in past stock prices that can help predicting future prices and proposed a theory for financial optionsβ valuation based on Fourierβs law and Brownianβs motions (time series).
Bachelierβs work get popular in the 60s during the computerβs era.
In 1965, Eugene Fama published a dissertation arguing for the random walk hypothesis (Stock marketβs prices evolve randomly: prices cannot be predicted using past data).
In 1970, Fama published a review of the theory and empirical evidences
The EMH (Efficient Market Hypothesis): Financial markets are efficient at processing information. Consequently, the prices of securities is a correct representation of all information available at any time.
Weak:
Not possible to earn superior profits (risk adjusted) based on the knowledge of past prices and returns.
Semi-strong:
Not possible to earn superior profits using all information publicly available.
Strong:
Not possible to earn superior profit using all publicly and inside information.
The CAPM describes the relationship between market risks and expected return for a security i (also called cost of equity), E(Re_i):
Re_i = Rf β Bi(Rm β Rf)
With:
Rf = Risk free rate (typically government bond rate)
Rm = Expected return for the whole market
Bi = The volatility risk of the security i compared to the whole market
(Rm β Rf) is consequently the market risk premium
According to the EMH, for a well-diversified portfolio, expected returns can only reflect those of the market as a whole. Consequently, in the CAPM formula, It would involves that for a diversified-enough portfolio: Ξ² = 1 so Re = Rm
Investors want to value companies before making investment decisions.
A typical way to do so is to use the Discounted Cash Flow (DCF) method:
See also: Prospect theory, disposition effect, heuristic, framing, mental accounting, Home bias, representativeness, conservatism, availability, greater fool theory, self attribution theory, anchoring, ambiguity aversion, winner's curse, managerial miscalibration and misconception, Equity premium puzzle, market anomalies, excess volatility, Bubbles, herding, limited liabilities, Fama French three 3 factors model.
This is a Behavioral Finance Lesson material which delivered by me for PhD students of Faculty of Business Administration in Karvina, Silesian University.
As an Investment Advisor, you will have to play an important role in enabling your clients to reach their financial goals without the emotions of fear or greed playing havoc. It is essential to understand Behavioural Finance, especially Heuristics and Biases that creep into financial decision making.
Behavioral Finance key notes for non financial managers. This help also the financial advisors discover the type of behavioral finance biases among their clients.
It also highlight the types of financial risks, and types of clients according to their risk capacity and risk tolerance.
It also add value to investors specially in the investment decision making process.
Abstract
The idea of an Efficient Market first came from the French mathematician Louis Bachelier in 1900: « The theory of speculation ».
Bachelier argued that there is no useful information in past stock prices that can help predicting future prices and proposed a theory for financial optionsβ valuation based on Fourierβs law and Brownianβs motions (time series).
Bachelierβs work get popular in the 60s during the computerβs era.
In 1965, Eugene Fama published a dissertation arguing for the random walk hypothesis (Stock marketβs prices evolve randomly: prices cannot be predicted using past data).
In 1970, Fama published a review of the theory and empirical evidences
The EMH (Efficient Market Hypothesis): Financial markets are efficient at processing information. Consequently, the prices of securities is a correct representation of all information available at any time.
Weak:
Not possible to earn superior profits (risk adjusted) based on the knowledge of past prices and returns.
Semi-strong:
Not possible to earn superior profits using all information publicly available.
Strong:
Not possible to earn superior profit using all publicly and inside information.
The CAPM describes the relationship between market risks and expected return for a security i (also called cost of equity), E(Re_i):
Re_i = Rf β Bi(Rm β Rf)
With:
Rf = Risk free rate (typically government bond rate)
Rm = Expected return for the whole market
Bi = The volatility risk of the security i compared to the whole market
(Rm β Rf) is consequently the market risk premium
According to the EMH, for a well-diversified portfolio, expected returns can only reflect those of the market as a whole. Consequently, in the CAPM formula, It would involves that for a diversified-enough portfolio: Ξ² = 1 so Re = Rm
Investors want to value companies before making investment decisions.
A typical way to do so is to use the Discounted Cash Flow (DCF) method:
See also: Prospect theory, disposition effect, heuristic, framing, mental accounting, Home bias, representativeness, conservatism, availability, greater fool theory, self attribution theory, anchoring, ambiguity aversion, winner's curse, managerial miscalibration and misconception, Equity premium puzzle, market anomalies, excess volatility, Bubbles, herding, limited liabilities, Fama French three 3 factors model.
This is a Behavioral Finance Lesson material which delivered by me for PhD students of Faculty of Business Administration in Karvina, Silesian University.
As an Investment Advisor, you will have to play an important role in enabling your clients to reach their financial goals without the emotions of fear or greed playing havoc. It is essential to understand Behavioural Finance, especially Heuristics and Biases that creep into financial decision making.
Behavioral Finance key notes for non financial managers. This help also the financial advisors discover the type of behavioral finance biases among their clients.
It also highlight the types of financial risks, and types of clients according to their risk capacity and risk tolerance.
It also add value to investors specially in the investment decision making process.
Behavioural Finance - An Introspection Of Investor PsychologyTrading Game Pty Ltd
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Investors always try to make rational decision while analyzing and interpreting information collected from various sources for different investment avenues to arrive at an optimal investment decision. But at the same time they are influenced by various psychological factors that influence them internally and bias their investment decision. Linter (1998) studied the various factors that influence internally the informed investment decision and included them under the discipline of behavioural finance. Behavioural finance studies how people make investment decision and influenced by internal factors and bias. The main purpose of the paper is to assess impact of behavioural factors over mutual fund investment decision made by investors in Raipur city.
Super Engaged Gen Y & X: Influencing with social technologies, gamification &...Mark Neely
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How financial services organisations can use a combination of behavioural economics principles and social media/mobile technologies to better engage with Gen Y and Millennial consumers.
Bill Janeway, Managing Director, Warburg Pincus discusses the good and the bad of investment bubbles and why he worries about the Unicorn Bubble.
Watch the full talk, with transcript by following this link:
http://businessofsoftware.org/2016/01/bill-janeway-warburg-pincus-productive-bubbles-video-slides-transcript-bos-europe-2015/
Don't leave money on the table - Get the most our of your licensed propertyFADEL
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Licensing continues to be big business. Global retail sales of licensed merchandise hit $251.B for 2015 and the corresponding royalty revenue grew to $13.9B. With so much money flowing between licensors and licensees, how does each side mitigate errors in the license management and royalty accounting of the licensed IP in order to maximize the revenue potential. For example as much as 70% of self-reporting on licensing contracts is inaccurate, and many royalty accountants are drowning in a sea of bloated Excel sheets. Whether you are a licensor or a licensee, FADELβs IP Management software improves accuracy and reporting by managing contract rights, identifying licensing violations and automating both royalty calculations and statement generation.
The basic paradigm of asset pricing is in vibrant flux. The purely rational approach is being subsumed by a broader approach based upon the psychology of investors. In this approach, security expected returns are determined by both risk and misvaluation. This survey sketches a framework for understanding decision biases, evaluates the a priori arguments and the capital market evidence bearing on the importance of investor psychology for security prices, and reviews recent models.
Prepublication version of paper: https://ssrn.com/abstract=265132.
Investor behaviour often deviates from logic and reason, and investors display many behaviour biases that influence their investment decision-making processes. The authors describe some common behavioural biases and suggest how to mitigate them.
Understanding for Incorporation, client bias diagnoses into the enhanced marketing and sales of investment products whilst, building mutual and beneficial long-term relationships.
The Warren Buffet Way
This presentation, created by MAQ AGAPITO, CRISTINA BONGHANOY, MELISSA SUE BUETA, SARAH LOPEZ, and GEM GALUPAR from the Financial Management class at the Ateneo Graduate School of Business, focuses on the key principles and strategies outlined in "The Warren Buffett Way" book. It highlights Warren Buffett's investment philosophy, which emphasizes value investing and the importance of patience and discipline in the investment process. The presentation also explores how these strategies can be applied in the Philippine market, providing a local case study and examples to show how these principles can be adapted and applied successfully by Filipino investors. This collaborative effort aims to bridge the gap between global investment strategies and local market dynamics, offering valuable insights for both aspiring and seasoned investors in the Philippines.
TSFINMAN R12
Ateneo Graduate School of Business
Individual financial advisory with respect to individual clients has occupied center stage especially due to the attendant effects of the global COVID-19 pandemic. Clients as well as advisors have had to react to these changes.
This is the first part of a two part presentation that will assist advisors/ individual wealth managers anticipate and react/address client management in a customised manner.
Wealth Management/ Individual financial advisory with respect to individual clients has occupied center stage especially due to the attendant effects of the global COVID-19 pandemic. Clients as well as advisors have had to react to these changes. This is the first part of a two part presentation that will assist advisors/ individual wealth managers anticipate and react/address client management in a customised manner
Behavioral finance, heuristics and marketing A.W. Berry
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Economic and financial heuristics explain how people's money related decision making is influenced by psychology and sociological trends. This is relevant in the marketing profession and to corporate strategists because purchase decisions, stock market investing and other financial decision making is linked to consumer behavior.
Similar to Behavioral finance -_an_explanation (20)
The European Unemployment Puzzle: implications from population agingGRAPE
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We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
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Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
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Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
This SWOT analysis examines BYD's strengths, weaknesses, opportunities, and threats as it competes in the fast-changing automotive and energy storage industries.
Founded in 1995 and headquartered in Shenzhen, BYD started as a battery company before expanding into automobiles in the early 2000s.
Initially manufacturing gasoline-powered vehicles, BYD focused on plug-in hybrid and fully electric vehicles, leveraging its expertise in battery technology.
Today, BYD is the worldβs largest electric vehicle manufacturer, delivering over 1.2 million electric cars globally. The company also produces electric buses, trucks, forklifts, and rail transit.
On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
The secret way to sell pi coins effortlessly.DOT TECH
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Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
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USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
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Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
what is the future of Pi Network currency.DOT TECH
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The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
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There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
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If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. π I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Introduction to Indian Financial System ()Avanish Goel
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The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
1. Behavioral Finance - An Explanation to Irrational Investment Behaviour Dr. MALABIKA DEO Professor & Head of Commerce, PONDICHERRY CENTRAL UNIVERSITY, Kalapet Puducherry β 605 014. INDIA.
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3. Assumption of Behavioural Investors Traditional Finance Behavioural Finance Rational & Correct Heuristic (Rule of Thumb) Price reflects intrinsic value Frame dependence, social influence causes Mispricing Risk & Return β prime factors for investors Decision Risk & Return β frames Specific. Rational, Logical, Transparent & Objective Herd instinct, Emotional and Sentimental.
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