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2018/19 Taught Postgraduate Module Catalogue

LUBS5031M Behavioural Finance

15 creditsClass Size: 120

Module manager: Kevin Keasey
Email: K.Keasey@lubs.leeds.ac.uk

Taught: Semester 2 View Timetable

Year running 2018/19

Pre-requisite qualifications

For all programmes except MSc Accounting and Finance, a knowledge of finance from previous degree (to be approved by the module leader) or attendance at LUBS5001M

This module is not approved as an Elective

Module summary

Behavioural Finance provides you with a critical appreciation of the fundamental theories and concepts in behavioural finance. The module relates theory to current corporate business decisions and market practice and will enable you to confidently use, interpret and manipulate financial formulas and numerical data.

Objectives

This module aims to provide students with an alternative view to the rational perspective of modern finance theory and a critical appreciation of the fundamental concepts in behavioural finance as a basis for further application. It draws on insights from psychology, exploring psychological biases in financial decision making, and examines the impact of these biases on investor behaviour and asset pricing.

Learning outcomes
Upon completion of this module students will be able to:
- Critique the rational perspective of modern finance theory and the key theoretical principles of behavioural finance
- Identify the heuristics and biases that affect financial decisions and explain how they influence investor behaviour and the functioning of financial markets
- Critically appraise the key theoretical concepts/techniques within behavioural finance and apply these appropriately to evaluate financial decision-making within corporations and markets
- Research and critically evaluate contemporary theories and the empirical research evidence

Skills outcomes
Upon completion of this module students will be able to:
Transferable
- Extract, synthesise and communicate complex theoretical explanations
- Critically evaluate the evidence base from the academic literature against real world examples
- Acknowledge and reference appropriate research sources


Syllabus

Indicative content
The syllabus provides coverage of some of the fundamental current concepts and theories underpinning current behavioural finance and indicative content includes: foundations of modern finance theory and efficient markets, limits to arbitrage, investor psychology (heuristics and biases), prospect theory, mental accounting, risk perception and preference (risk and loss aversion), and behavioural portfolio theory.

The applications of the topics covered are: the equity premium puzzle, excess volatility, momentum and herding, overreaction and underreaction, investor overconfidence, disposition and house money effects, investor sentiment and emotions in financial decisions.

Teaching methods

Delivery typeNumberLength hoursStudent hours
Lecture102.0020.00
Seminar51.005.00
Private study hours125.00
Total Contact hours25.00
Total hours (100hr per 10 credits)150.00

Private study

Post lecture reading: 50 hours
Seminar reading and preparation: 25 hours
Preparation for written examination: 50 hours

Opportunities for Formative Feedback

Students will receive verbal feedback during seminars on the assigned exercises. This will provide a main resource to self-monitoring progress during the course. There will be an opportunity for students to receive formative feedback prior to the examination.

Methods of assessment


Exams
Exam typeExam duration% of formal assessment
Standard exam (closed essays, MCQs etc)2 hr 100.00
Total percentage (Assessment Exams)100.00

The resit for this module will be 100% by 2 hours examination.

Reading list

The reading list is available from the Library website

Last updated: 12/12/2018 10:48:53

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