Behavioral Finance

Introduction

In present economy, investors and business managers are faced with the understanding of how financial markets react to new financial and economic data. Behavioral finance is a sphere of study focused on how psychological influences can affect market outcomes.

The decisions we make can have a crucial impact on the financial health of the company. Beyond the fundamental analysis of financial statement, understanding and classifying different types of behavioral finance biases can be very significant when narrowing in on the study or analysis of industry or sector outcomes and results.

This course will explore the causes and potential measures you can take to manage the most common self-deception biases, cognitive biases, emotional biases, loss aversion and herding bias.

Course Objective

At the end of this course, participants will be able to:

• Define behavioral finance and its significance on financial markets
• Identify and analyze investors and financial practitioners’ psychology trading biases
• Explore the root causes and potential measures to manage the most common cognitive biases
• Enumerate the most common emotional biases and discuss their causes with real life scenarios.
• Study loss aversion and herding bias and other social factors that twist decision-making outcomes.

COURSE OUTLINE

Module One: Behavioral Finance Introduction

• Definition of finance : Hard versus Soft Finance
• Understanding behavioral finance
• The financial system operators: Arbitrageurs, Speculators and Hedgers
• The Traditional portfolio theory
• The investors risk profiles
  • Risk Takers
  • Risk neutral
  • Risk Adverse
• Stock market & Market sentiment crashes

Module Two: Relationship of Financial Decisions and Application of Psychology

• Rules of Thumb (Heuristics)
• Neurofinance and Neuroeconomics
• Emotional Finance
• Experimental Finance
• The Risk Psychology
• Psychological Influences on Financial Policy and Regulation

Module Three: Behavioural Biases & Asset Pricing

• Market Inefficiency
• Belief- and Preference-Based Models
• Disposition Effect
• Overconfidence
• Familiarity Bias
• Limited Attention & other behavioral biases

Module Four: Behavioural Corporate Finance

• Corporate Governance
• Capital Budgeting and Other Investment Decisions
• Financing Decisions
• Dividend Policy Decisions
• Initial Public Offerings
• Mergers and Acquisitions

Module Five: Investor & Finance Behaviour

• Derivative Markets
• The Essential Foundation of Financial Markets
• Individual Investor Trading
• Financial Decisions & Cognitive Abilities
• Participant Behavior
• Institutional Investors

Who Should Attend?

• Capital Markets officials
• Financial Analysts
• Equity Sales and Portfolio Managers
• Risk Management directors
• Professionals working with financial sector
• Professionals seeking to develop their understanding of Behavioral Finance

Delivery Method: This will include combine lectures, discussions, group exercises, case studies and illustrations. Participants will also understand the theoretical and practical knowledge of the topic.

Venue: Gambia

Fee: Open

Duration: 1 week

Course Date:  February 19th – 23rd 2024