Behavioral Finance
CORNELL UNIVERSITY
JOHNSON GRADUATE SCHOOL OF MANAGEMENT NBA5980, BEHAVIORAL FINANCE FALL SEMESTER (2ND HALF), 2012
Prof. Ming Huang 401H Sage Hall Phone: 255-9594 Email: mh375@cornell.edu Office hours: Monday 4:30-6:00pm Class Meetings: Section 01: Mon/Wed: 1:25-2:40pm Section 02: Mon/Wed: 2:55-4:10pm Location: Sage Hall B08
COURSE DESCRIPTION
Traditional finance theories assume that financial market participants are rational, and argue that the financial market is always efficient and prices are always right. Behavioral finance, on the other hand, argues that securities market prices can be wrong, and that a lot of financial market phenomena can plausibly be understood only under the assumption that some market participants are not fully rational. This course gives an introduction to behavioral finance, and discusses its applications in investment management. We will first introduce the conceptual framework of behavioral finance, and then apply the framework to the study of individual stock trading and portfolio management. Topics covered in the course include: limits of arbitrage (i.e., why stock market mispricing can persist), investor psychology and behavior (and how to overcome our own irrational biases in stock trading), stock index predictability and market timing, stock portfolios that were shown to beat the market (including value, momentum, size, earnings quality, volume, earnings management, and many other effects), and applications of behavioral finance in quantitative asset management. As a summary of the course, we will apply the conceptual framework of behavioral finance to the understanding of China’s financial market (as an example of emerging markets).
PREREQUISITES
You must have taken an introductory level finance course that covers basic topics such as stocks and bonds, the CAPM, and the efficient market hypothesis.
COMMUNICATING WITH ME
My office hours are Monday, 4:30-6:00pm. You should also feel free to communicate with me by
JOHNSON GRADUATE SCHOOL OF MANAGEMENT NBA5980, BEHAVIORAL FINANCE FALL SEMESTER (2ND HALF), 2012
Prof. Ming Huang 401H Sage Hall Phone: 255-9594 Email: mh375@cornell.edu Office hours: Monday 4:30-6:00pm Class Meetings: Section 01: Mon/Wed: 1:25-2:40pm Section 02: Mon/Wed: 2:55-4:10pm Location: Sage Hall B08
COURSE DESCRIPTION
Traditional finance theories assume that financial market participants are rational, and argue that the financial market is always efficient and prices are always right. Behavioral finance, on the other hand, argues that securities market prices can be wrong, and that a lot of financial market phenomena can plausibly be understood only under the assumption that some market participants are not fully rational. This course gives an introduction to behavioral finance, and discusses its applications in investment management. We will first introduce the conceptual framework of behavioral finance, and then apply the framework to the study of individual stock trading and portfolio management. Topics covered in the course include: limits of arbitrage (i.e., why stock market mispricing can persist), investor psychology and behavior (and how to overcome our own irrational biases in stock trading), stock index predictability and market timing, stock portfolios that were shown to beat the market (including value, momentum, size, earnings quality, volume, earnings management, and many other effects), and applications of behavioral finance in quantitative asset management. As a summary of the course, we will apply the conceptual framework of behavioral finance to the understanding of China’s financial market (as an example of emerging markets).
PREREQUISITES
You must have taken an introductory level finance course that covers basic topics such as stocks and bonds, the CAPM, and the efficient market hypothesis.
COMMUNICATING WITH ME
My office hours are Monday, 4:30-6:00pm. You should also feel free to communicate with me by