examine your personal emotional state as you make financial decisions. Place yourself in the role...
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examine your personal emotional state as you make financial decisions. Place yourself in the role of an individual investor seeking to make a lucrative investment in Apple, Inc. Now, place yourself in the role of an individual investor seeking to make a lucrative investment in XYZ Corporation (a virtual unknown in the market). What personal investment biases come to mind? How might your behavioral biases play into the investment decisions you make? To better identify the power of emotions, consider the following: The cost of a $10 beer on the beach versus the cost of a $10 beer at a nice restaurant. Psychology of Financial Markets (FIN 686): Course Outline: Kumar: Fall 2018 28 When is $10 for a bottle of beer fair? When are people likely to overpay willingly? What does this behavior tell us about the pricing of financial assets? In particular, when would they be systematically overpriced and when are they likely to be underpriced? Please discuss and identify the specific emotional factors that may generate mispricing.
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