Investments ch9-13 noteswap

Investments ch9-13 noteswap - Finance 3826 Investments...

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Finance 3826 Investments - Morales Chapter 9 – Behavioral Financing (Do not need Technical Analysis/Voodoo) Behavioral Financing – merging psychology and financing. o One main reason is that economics assumes investors are rational and not all people are rational. o Ex: Refinancing house where you have 6.9% and could get 4.9% and ask Walter should I do that? o We know that people do things that don’t make sense. People can occasionally be crazy – People do not always choose the obvious answer. o Framing – How we portray something means so much. Ex: Obama Stimulus package – Says he will save **** Jobs but how can you show if you saved a job? Just framed to look like you are. Big part of Behavioral Financing. Ex: Idea that long run equities have no risk – you can say it goes away in the long run, so if you get out too early you don’t… but it could go up. No chance you can be wrong cause it hasn’t been long enough then. Ex: unrealized losses in stock – cant sell stock at 5 because bought it at 20… o Idea that people are in the equity market because they couldn’t take seeing it rebound
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This note was uploaded on 03/01/2011 for the course MGT 3111 taught by Professor Carter during the Spring '11 term at LSU.

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Investments ch9-13 noteswap - Finance 3826 Investments...

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