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DRPS : Course Catalogue : Business School : Business Studies

Undergraduate Course: Behavioural Finance and Market Efficiency (ACCN10026)

Course Outline
SchoolBusiness School CollegeCollege of Humanities and Social Science
Course typeStandard AvailabilityAvailable to all students
Credit level (Normal year taken)SCQF Level 10 (Year 3 Undergraduate) Credits20
Home subject areaBusiness Studies Other subject areaNone
Course website None Taught in Gaelic?No
Course descriptionThis elective is designed to provide an overview of an exciting new area in finance which takes as its premise that investment decision$úmaking and investor behaviour are not necessarily driven by &«rational&ª considerations but by aspects of personal and market psychology. Behavioural finance recognises that our abilities to make complex investment decisions are limited, and that we can improve our performance as investors and fund managers by recognising the biases and errors of judgment to which all of us are prone.

The elective discusses what we know about the psychology of financial decision-making and explores the behaviour of both individual investors and finance professionals. Are markets really &«efficient&ª? How can we explain the existence of market anomalies?
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Students MUST have passed: Principles of Finance (BUST08003)
Prohibited Combinations Other requirements None
Additional Costs None
Information for Visiting Students
Pre-requisitesEquivalent to Principles of Finance
Displayed in Visiting Students Prospectus?Yes
Course Delivery Information
Delivery period: 2011/12 Semester 1, Available to all students (SV1) WebCT enabled:  Yes Quota:  None
Location Activity Description Weeks Monday Tuesday Wednesday Thursday Friday
CentralLecture1-5,7-11 09:00 - 10:50
First Class Week 1, Tuesday, 09:00 - 10:50, Zone: Central. 7 Bristo Square, Lecture Theatre 4
No Exam Information
Delivery period: 2011/12 Semester 1, Part-year visiting students only (VV1) WebCT enabled:  Yes Quota:  None
Location Activity Description Weeks Monday Tuesday Wednesday Thursday Friday
CentralLecture1-5,7-11 09:00 - 10:50
First Class Week 1, Tuesday, 09:00 - 10:50, Zone: Central. 7 Bristo Square, Lecture Theatre 4
No Exam Information
Summary of Intended Learning Outcomes
This course is designed to introduce students to the basic principles of behavioural finance and its implications for investors in international capital markets, analysts and other market participants. On successfully completing the elective you will:

- Understand the differences between a behavioural finance perspective and a traditional finance perspective
- Be up to speed with important developments in this new area and the associated practical insights they provide
- Recognise your own decision errors and understand the reasons for these so you can avoid future decision errors
- Understand how, by appreciating the cognitive biases to which you are prone, you can become a better investor or financial manager
- Have a deeper understanding of the market efficiency debate and recent developments
- Be in a position to exploit market anomalies appropriately
- Develop the ability to appraise critically some of the less well-founded claims made by behavioural finance proponents and reconcile the teachings of behavioural finance with traditional views of market efficiency

Intellectual Skills and personal development:
Students will develop a critical understanding of the main principles of cognitive psychology as applied in behavioural finance and also how well the traditional market efficiency paradigm fit current financial markets, together with recent developments in thinking and the existence of stock market anomalies. Practical implications will be emphasised.

Subject Specific Skills:
Students will be familiarised with the latest developments and issues in behavioural finance and market efficiency, and understand their implications for securities pricing and financial analysis.

Assessment Information
There will be two components of assessment, coursework (30%) and a final examination (70%).

For the coursework: Each student is required to write a report of an absolute maximum length of 3000 words. There will be two sections: One section for behavioural finance topics and one section for market efficiency topics. Students will be given 2 topics in each section and they will be required to choose compulsory one topic from each section (SECTION A: Behavioural finance topics, SECTION B: Market anomalies topics)

References for the above essays will be given in the course outline and on the lecture slides. Students are expected to conduct a further literature review; they will be positively assessed on the resulting original insights they bring to their essays.
Special Arrangements
Additional Information
Academic description Not entered
Syllabus Not entered
Transferable skills Not entered
Reading list Not entered
Study Abroad Not entered
Study Pattern Not entered
Course organiserDr Maria Michou
Tel: (0131 6)50 8341
Course secretaryMs Caroline Hall
Tel: (0131 6)50 8336
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