FIN 3617 Behavioural Finance
FIN 3617 Behavioural Finance
Over the past decades, the field of finance has developed a successful paradigm based on the notions that investors and managers are rational and that the market is efficient. In recent years, however, anecdotal evidence as well as theoretical and empirical research has shown this paradigm to be insufficient to describe various features of actual financial markets. In this course, we explain financial market phenomena by incorporating institutional, social, cognitive, and emotional biases to the traditional paradigm. This broader perspective is called behavioral finance.
The objective of this course is to give students an understanding of investor and managerial behavior and its impact on financial market outcomes. The participants should be able to identify most common obstacles to making rational decisions, to debias their own decisions, and to understand the risks and opportunities associated with biased decisions. The course spans all major fields of finance, including household finance, asset pricing, and corporate finance.
Students will acquire an understanding of the following topics:
- What is behavioral finance?
- How do people make investment decisions?
- How does investor behavior affect asset prices?
- How do firms respond to investor behavior?
After taking this course students will be able to:
- Recognize behavioral biases in decision making
- Debias financial decisions
- Identify implications for asset pricing
- Understand effects on corporate behavior
- The acquired theoretical and practical knowledge provided by the course enables the student to understand the role of behavioral influences across various settings in financial markets. The student develops a behavioral framework that can be applied to financial decision-making, asset pricing, and corporate behavior.
- Behavioral finance vs. traditional finance
- Behavioral finance and investor behavior
- Behavioral finance and asset pricing
- Behavioral finance and corporate behavior
The course includes a combination of lectures and cases.
Specific information regarding any aspect of the course or student evaluation will be provided in class. It is the student's responsibility to obtain any information provided in class that is not included on the course homepage/itslearning or in the reading materials.
Students will be expected to actively participate in all in-class discussions (related to case studies, course concepts, applications of behavioural finance in the industry, etc.).
Spreadsheets (Excel) are used for certain practical applications and examples. Students should be familiar with their use.
This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information below in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course. You will find detailed information about the point system and the cut off points with reference to the letter grades when the course start.
At re-sit all exam components must, as a main rule, be retaken during next scheduled course.
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Higher Education Entrance Qualification.
SØK 3520 Microeconomics or EXC 3520 Microeconomics and BØK 3423 Finance, or equivalent.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 10 Grouping: Individual Duration: 1 Semester(s) Comment: This component consists of a number of hand-ins that are submitted throughout the semester. Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Weight: 20 Grouping: Group (1 - 4) Duration: 1 Semester(s) Comment: This component consists of a number of hand-ins that are submitted throughout the semester. Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Activity Form of assessment: Class participation Weight: 10 Grouping: Individual Duration: 1 Semester(s) Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 60 Grouping: Individual Support materials:
Duration: 3 Hour(s) Exam code: FIN36171 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
| Activity | Duration | Comment |
|---|---|---|
Teaching | 42 Hour(s) | |
Prepare for teaching | 78 Hour(s) | |
Group work / Assignments | 40 Hour(s) | |
Student's own work with learning resources | 40 Hour(s) | Preparation for the final exam. |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.