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Behavioral Finance Theory And Practice Applications

Posted on:2004-02-13Degree:MasterType:Thesis
Country:ChinaCandidate:W LiFull Text:PDF
GTID:2206360122472011Subject:Finance
Abstract/Summary:PDF Full Text Request
Since 1980s, behavioral economics has grown rapidly. As the most fruitfully applied field of behavioral economics, behavioral finance has been developing in the course of criticizing and raising doubts to standard finance(main-stream finance)and outstanding in the practice of capital market. Behavioral finance has argued that security' s market price is decided not only by internal factors of security, but also by investors' behavior,that is, investors' psychology and behavior influence the fluctuation and determinant of security' s market price greatly. Behavioral finance is composed of two key factors: driven by irrational bias, part of investors behave irrationally; and rational traders are of en powerless to correct deviations from fundermental value caused by irrational traders through hedging, this means that irrational expectation can have a substantial and long-lived impact on prices.Derived mainly from explanations to various complicated abnormal phenomenona of financial market, behavioral finance is not systematic and perfect up to now. This research tries to analyse and explore behavioral finance theory and its power to expain mispricing, and to study investment strategy.This research is divided to seven chapters:Chapter1: Introduction to the significance of behavioral finance. Chapter2: History of behavioral economics and behavioral finance. Chapter3: Shortcomings of standard finance and behavioral finance' s challenge. Chapter4: Main theories and models of behavioral finance. Chapter5: Behavioral finance' s explanations to asser mispricing. Chapter6: Investment strategy of behavioral finance. Chapter7: Conclusion.
Keywords/Search Tags:standard finance, behavioral finance, asset mispricing, explanations, investment strategy.
PDF Full Text Request
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