Investors tend to be their own worst enemies. In this third course, you will learn how to capitalize on understanding behavioral biases and irrational behavior in financial markets. You will start by learning about the various behavioral biases – mistakes that investors make and understand their reasons. You will learn how to recognize your own mistakes as well as others’ and understand how these mistakes can affect investment decisions and financial markets. You will also explore how different preferences and investment horizons impact the optimal asset allocation choice.
Biases and Portfolio Selection
Biases and Portfolio Selection
This course is part of Investment and Portfolio Management Specialization
Instructor: Arzu Ozoguz
19,693 already enrolled
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Gain insight into a topic and learn the fundamentals.
4.6
(273 reviews)
15 hours to complete
3 weeks at 5 hours a week
Flexible schedule
Learn at your own pace
Skills you'll gain
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Assessments
9 assignments
Taught in English
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This course is part of the Investment and Portfolio Management Specialization
When you enroll in this course, you'll also be enrolled in this Specialization.
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There are 4 modules in this course
This module introduces the third course in the Investment and Portfolio Management Specialization. In this module, we first present the efficient market hypothesis (EMH) – another pillar idea of modern finance. You will learn about its rationale as well as the empirical evidence that supports and challenges the predictions of the EMH such as anomalies. Finally, we will consider why smart money may sometimes fail to exploit away anomalies in financial markets.
What's included
9 videos12 readings3 assignments1 peer review1 discussion prompt
In this module, we review the behavioral critique of market rationality. In contrast to the presumption that investors are rational, behavioral finance starts with the assumption that they are not. We will examine some of the information-processing and behavioral biases uncovered by psychologists in several contexts. In addition, we will consider alternative, more realistic ways of describing investor preferences.
What's included
12 videos10 readings2 assignments
In this module, we review a number of puzzles related to the aggregate stock market and the cross-section of average stock returns that have been documented in the literature. We examine how the behavioral biases and tendencies discussed in the previous module might result in some of these puzzles observed in financial markets.
What's included
9 videos2 readings2 assignments2 peer reviews
In this last brief module, we turn our attention to the behavior of individual investors and review the empirical evidence on how behavioral biases and tendencies we discussed in the previous modules affect individual investor portfolio choice and trading decisions.
What's included
6 videos3 readings2 assignments
Instructor
Instructor ratings
4.5 (22 ratings)Offered by
Recommended if you're interested in Finance
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University of Illinois Urbana-Champaign
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4.6
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Showing 3 of 273
AM
5
Reviewed on Jun 19, 2019
Excellent course material
AA
5
Reviewed on Jul 1, 2020
For me, it is an excellent course. Understanding some concepts of biases and behavior when making portfolio decisions is a good addition to knowledge when making investment decisions.
RD
4
Reviewed on Dec 5, 2018
I've tried a few courses that are similar and this one is better than average.
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