Accounting; ‘Explain how insights from Behavioural Finance can help to design investment strategies.’
Assessment Brief
Assignment Question:
‘Explain how insights from Behavioural Finance can help to design investment strategies.’
Advice and Guidance:
Your essay should not exceed 1,500 words.
In your written assignment, you should consider the concepts you were introduced to across the MN3138 module and focus on the market anomalies, limits to arbitrage as well as the role of biases and emotions in financial decision-making.
Please be structured and precise in your answers. Choose 2-3 concepts and explain exactly which investment ideas can be drawn from them. For example, you might want to discuss behavioural aspects of value investing, momentum investing etc. Keep the general remarks (e.g., on what Behavioural Finance is) to the minimum.
There is plenty of information online concerning examples of innovative investment organisations that exploit insights from Behavioural Finance; you can draw upon these materials in your analysis. You will receive additional marks for discussing practical examples.
You must address the question asked and not try to re-define, or ‘twist it round’, to allow you to write about something else. ‘Not answering the question’ will result in a significant loss of marks.
Your own thinking and evaluation should be apparent in the discussion of the topic.
It is expected that you will consult academic and professional journals (next to textbooks). Journals provide you with the newest insights and ideas from the field.
Your essay must be properly referenced. You might want to choose the Harvard citation style (http://www.citethisforme.com/harvard-referencing).
Getting Started!
We expect you to refer to a range of literatures in your presentation. We have provided you with the following list to get you started. This is by no means an exhaustive list of resources and those looking to achieve high grades should include literature and resources beyond those listed here. These literatures are designed to stimulate your thinking and to give you an overview of the breadth of the debate you are engaging with:
Montier, J. (2018), Behavioural Finance: Insights Into Irrational Minds and Markets, New York: Wiley.
Fraser-Sampson G. (2013), Intelligent Investing: A Guide to the Practical and Behavioural Aspects of Investment Strategy. Global Financial Markets series. Palgrave Macmillan: London.
Subrahmanyam, A. (2007), Behavioural Finance: A Review and Synthesis, European Financial Management, Vol. 14, No. 1, 12–29.
https://alphaarchitect.com/ (their research page provides a lot of interesting, practice-oriented materials in form of blogs, white papers, videos, book recommendations etc.)
Blog https://behaviouralinvestment.com/
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