Behavioural Finance and Investment Management

Indian Institute of Management Indore

How long?

  • 2 days
  • in person

What are the topics?

Indian Institute of Management Indore

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Who should attend

Investment Managers, Finance Advisors, Banking Professionals, Entrepreneurs, and Finance Professionals

About the course

A possible impact of investor sentiment on the financial market has been a subject of considerable interest to investment management professionals. Finance professionals often describe the unconventional boom and bust cycles in the market as market sentiment, investor herding, market rally, irrational exuberance, emotional traps, psychological barrier, and market mood in the popular financial press. The underlying principle that motivates such financial behaviour is human phycology and a popular finance discipline called behavioural finance. Behavioral finance aims at improving our understanding of financial decisions, portfolio diversification behaviour, and how they affect market prices. Behavioural finance applies principles of psychology and sociology to the study of the human behaviour of real-world investors and financial practitioners. The two traditional finance theories i.e., the efficient market hypothesis and expected utility theory suggest that financial market in general price stocks correctly because it reflect all publicly available information, and investor’s utility maximization follows a rational approach. However, behavioural finance assumes that investors are “normal” not “rational”. Behavioral finance argues that many facts about stock market movement, equity prices, investor behavior, are best understood in models where at least some agents are not fully rational.

This programme will introduce concepts of behavioral finance and its application in financial market and investor behaviour. This programme aims to give insights as to how the investor sentiment can be measured, analysed, and put into practical asset management decision. The programme would introduce several concepts and tools which may be helpful to understand several behavioural biases of individual investors. This programme helps to understand financial decision making behavior from a psychology perspective, and development of better portfolio allocation strategy following behavioral finance principles.

Objectives

  • To introduce basic principles of behavioral finance
  • To understand behavioral finance implications for investors, analysts, and managers
  • To use the behavioural finance principles for investment management decision
  • To understand psychological biases that affect financial decisions and behavioral asset pricing

Content

  • Understanding of Behavioural Finance
  • Behavioural Finance vs. Traditional Finance
  • Behavioural Finance and Investment Decision making
  • The Identification of Psychological Biases
  • Cognitive Biases and Financial Decision Making
  • Investor Sentiment Measurement and its Application
  • Pricing of Investor Sentiment Risk
  • Client’s Risk Profile and Optimal Asset Allocation
  • Behavioural Portfolio Theory
  • Improving Financial Service Quality with Behavioural Finance

Experts

Saumya Ranjan Dash

Dr. Saumya Ranjan Dash has done his Ph.D. from the Indian Institute of Technology Kharagpur. (IIT Kharagpur), India. The topic of his doctoral dissertation is Asset Pricing Models, Financial Market Anomalies and Investor Sentiment: Evidences from the Indian Stock Market. Dr. Saumya Ranjan Dash h...

Behavioural Finance and Investment Management at Indian Institute of Management Indore

From  30000 INR$417

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