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48 Cards in this Set
- Front
- Back
Proposes psychological theories - market anonalies = |
Financial choices |
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2 example of self defeating behavior |
Yoyo dieter Educated smoker |
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The results will be good for now but it can go back to what it is |
Yoyo dieter |
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Subfield of behavioral economics |
Behavioral finance proposes |
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You are doing something bad for you but you keep doing it |
Educated amoker |
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Financial examples of self defeating behavior |
Return chaser Overconfident gumbler Too conservative investor |
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The person who is only after income |
Return chaser |
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2 factors of return chaser |
Risk return trade off |
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The main factor which made them decide is |
Return |
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They think that they are the smartest |
Overconfident gumbler |
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They think that all investments are risky |
Too conservative investors |
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Deals with math and equations |
Standard/traditional finance |
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Imbeded with the homo economicus or “rational man” |
Standard/traditional finance |
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The decisions referring to is economic |
Rational man |
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The decision making is how the investors should behave |
Standard/traditional finance |
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Ideal/idealistic |
Standard/traditional finance |
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You tend to identify and learn from the human psychological phenomena in terms of financial market and behavior |
Behavioral finance |
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They base their observation in the financial behavior of people |
Behavioral finance |
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The reason why there are Behavioral finance is to improve |
Financial literacy |
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You study how the real world functions |
Behavioral finance |
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Examines behavior and biases of individual people |
Micro |
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Behavioral bases can have profound impact on decision making and can drive sub-optimal decision making and errors that directly contracting w/ traditional finance |
Micro |
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Detects and describe anomates in the efficient market hypothesis |
Macro |
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Analyzes market anomalies |
Macro |
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Questions informational efficiency of market |
Macro |
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Market are impacted by behavioral influences |
Macro |
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3 forms of efficient market hypothesis |
Weak Semi strong Strong |
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It contents that all past market prices and data are fully reflected in the security prices that is technical analysis, which of little or no value |
Weak |
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It contents that all publicly available information is fully reflected in the security prices that is fundamental analysis is of no value |
Semi strong |
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It contents that all information is fully reflected in the security prices that is, it’s either information is of no value |
Strong |
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Key assumption is that all relevant info is freely for a market to be efficient available |
Efficient |
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3 main type of market anomalies |
Fundamental Technical Calendar |
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These are irregularities that emerged when the stock performance is in light in the fundamental assessment of the stock’s value |
Fundamental |
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Sometimes technical analysis reveals inconsistencies in the efficient market hypothesis |
Technical |
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Sometimes technical analysis reveals inconsistencies in the efficient market hypothesis |
Technical |
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Comes to do with the times of the year |
Calendar |
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Sometimes technical analysis reveals inconsistencies in the efficient market hypothesis |
Technical |
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Comes to do with the times of the year |
Calendar |
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A stocks in general, small stocks in particular,abnormally has high returns |
January effect |
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Sometimes technical analysis reveals inconsistencies in the efficient market hypothesis |
Technical |
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Comes to do with the times of the year |
Calendar |
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A stocks in general, small stocks in particular,abnormally has high returns |
January effect |
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They declare at this point the specific earnings of the corporation, so people tend to do advance buying |
December effect |
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Sometimes technical analysis reveals inconsistencies in the efficient market hypothesis |
Technical |
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Comes to do with the times of the year |
Calendar |
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A stocks in general, small stocks in particular,abnormally has high returns |
January effect |
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They declare at this point the specific earnings of the corporation, so people tend to do advance buying |
December effect |
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Shows higher return on the last and first 4 days of each month |
Turn of the month effect |