Module manager: Shima Amini
Email: S.Amini@lubs.leeds.ac.uk
Taught: Semester 2 (Jan to Jun) View Timetable
Year running 2018/19
| LUBS2205 | Corporate Finance |
| LUBS2035 | Finance for Small Business |
This module is not approved as a discovery module
On completion of this module, students should be able to:
(1) Critique the rational perspective of modern finance theory.
(2) Identify the heuristics and biases that affect financial decisions.
(3) Explain how heuristics and biases influence investor behaviour and the functioning of the financial markets.
This module aims to provide students with an alternative view to the rational perspective of modern finance theory. Drawing on insights from psychology the module explores the psychological biases in financial decision making, and examines the impact of these biases on investor behaviour and asset pricing.
- Ability to critique rational perspective of modern finance theory.
- Ability to understand how heuristics and biases impact investor behaviour and financial markets.
- Ability to apply behavioural concepts to understand specific applications in financial markets.
Foundations and theoretical developments:
- Foundations of modern finance theory and efficient markets
- Limits to arbitrage
- Investor psychology: heuristics and biases
- Prospect theory, loss aversion and mental accounting
- Risk perception and preference: risk averse or loss averse
- Behavioural portfolio theory
Applications (selection of applications to be covered):
- Equity premium puzzle
- Excess volatility
- Momentum and herding
- Overreaction and underreaction
- Investor overconfidence
- Disposition effect and house money effect: prior outcomes
- Investor sentiment and emotions in financial decisions
| Delivery type | Number | Length hours | Student hours |
|---|---|---|---|
| Lecture | 11 | 1.5 | 16.5 |
| Seminar | 5 | 1 | 5 |
| Private study hours | 78.5 | ||
| Total Contact hours | 21.5 | ||
| Total hours (100hr per 10 credits) | 100 | ||
Follow on reading from lectures and preparation for classes. Students will be expected to contribute to discussion in the classes. Completion of on-line MCQ tests.
The methods of formative feedback used on the module include:
- Class discussion of required reading;
- On-line MCQ tests.
| Exam type | Exam duration | % of formal assessment |
|---|---|---|
| Standard exam (closed essays, MCQs etc) | 2.0 Hrs 0 Mins | 100 |
| Total percentage (Assessment Exams) | 100 | |
The resit for this module will be 100% by 2 hour examination.
The reading list is available from the Library website
Last updated: 12/12/2018
Errors, omissions, failed links etc should be notified to the Catalogue Team