About this Course
4.5
119 ratings
12 reviews
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. After this course, you will be more effective in overcoming biases to do the wrong things at the wrong times and tailoring an investment strategy that is best suited on your or your client’s profile and investment needs....
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Flexible deadlines

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Clock

Approx. 16 hours to complete

Suggested: 4 weeks of study...
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English

Subtitles: English...

Skills you will gain

Behavioral FinanceCognitive BiasInvestmentBehavioral Economics
Globe

100% online courses

Start instantly and learn at your own schedule.
Calendar

Flexible deadlines

Reset deadlines in accordance to your schedule.
Clock

Approx. 16 hours to complete

Suggested: 4 weeks of study...
Comment Dots

English

Subtitles: English...

Syllabus - What you will learn from this course

Week
1
Clock
4 hours to complete

Efficient markets hypothesis and limits of arbitrage

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. ...
Reading
9 videos (Total 67 min), 12 readings, 4 quizzes
Video9 videos
Efficient Markets Hypothesis (EMH)7m
Examples of market efficiency: Market efficiency in real time3m
Three Versions of Efficient Market Hypothesis9m
Event studies6m
Anomalies13m
Mutual fund and analyst performance9m
Smart investor should make markets efficient, right?8m
Efficient Market Hypothesis2m
Reading12 readings
Grading Policy10m
How to use discussion forums10m
Meet & Greet: Get to know your classmates10m
Pre-Course Survey10m
Watch market efficiency in real time10m
Real Time Market Efficiency10m
Lecture Handouts: Efficient Markets Hypothesis (EMH)10m
Lecture Handouts: Are markets efficient?10m
EntreMed Case10m
New Facts in Finance (optional)10m
Lecture Handouts: Limits to arbitrage10m
Module 1: Quiz solutions10m
Quiz3 practice exercises
Efficient markets hypothesis10m
Are markets efficient?10m
Efficient markets and limits of arbitrage16m
Week
2
Clock
3 hours to complete

Biases and realistic preferences

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....
Reading
12 videos (Total 75 min), 10 readings, 2 quizzes
Video12 videos
What are heuristics-driven biases?3m
Representativeness9m
Conservatism and anchoring6m
Overconfidence7m
Frame dependence9m
Mental accounting11m
Realistic preferences3m
Loss aversion or Prospect theory9m
Habit utility4m
Catching up with the Joneses3m
Biases and realistic preferences2m
Reading10 readings
Lecture handouts: Heuristics-driven biases10m
Additional heuristic-driven biases (required)10m
Heuristics and Biases in Retirement Savings Behavior (optional)10m
Behaving Badly (optional)10m
Seven Sins of Fund Management (optional)10m
Lecture handouts: Frame dependence10m
Lecture Handouts: Preferences10m
The Psychology and Neuroscience of Financial Decision Making10m
Psychology of what we do with our money (optional)10m
Module 2: Quiz solutions10m
Quiz2 practice exercises
Heuristic driven biases and frame dependence14m
Biases and realistic preferences20m
Week
3
Clock
5 hours to complete

Inefficient markets

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....
Reading
9 videos (Total 72 min), 2 readings, 4 quizzes
Video9 videos
Equity premium puzzle9m
Volatility puzzle12m
Closed-end fund puzzle10m
Examples from Closed-End Country Funds5m
Long-run reversals11m
Value effect10m
Momentum9m
Summary1m
Reading2 readings
Lecture handouts: Applications – the Aggregate Stock Market10m
Lecture handouts: Applications – The cross-section of average stock returns10m
Quiz2 practice exercises
Applications – the Aggregate Stock Market12m
Applications – The cross-section of average stock returns10m
Week
4
Clock
1 hour to complete

Applications: Investor behavior

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....
Reading
6 videos (Total 24 min), 3 readings, 2 quizzes
Video6 videos
Failure to Diversify6m
Naïve diversification3m
Excessive trading6m
Individual investors’ buying and selling decision5m
Summary1m
Reading3 readings
Lecture handouts: Investor behavior10m
Module 4: Quiz solutions10m
End-of-Course Survey10m
Quiz2 practice exercises
Investor Behavior10m
Applications: Investor behavior16m
4.5
Briefcase

83%

got a tangible career benefit from this course
Money

50%

got a pay increase or promotion

Top Reviews

By AHFeb 4th 2017

I've learnt a lot with this course. Sometimes we don't stop to think about how to think on making decision.

By OSJan 19th 2017

Great course on application of behavioural finance in business decision making

Instructor

Arzu Ozoguz

Finance Faculty
Jones Graduate School of Business

About Rice University

Rice University is consistently ranked among the top 20 universities in the U.S. and the top 100 in the world. Rice has highly respected schools of Architecture, Business, Continuing Studies, Engineering, Humanities, Music, Natural Sciences and Social Sciences and is home to the Baker Institute for Public Policy....

About the Investment and Portfolio Management Specialization

In this four-course Specialization, you’ll learn the essential skills of portfolio management and personal investing. All investors – from the largest wealth funds to the smallest individual investors – share common issues in investing: how to meet their liabilities, how to decide where to invest, and how much risk to take on. In this Specialization, you will learn how to think about, discuss, and formulate solutions to these investment questions. You will learn the theory and the real-world skills necessary to design, execute, and evaluate investment proposals that meet financial objectives. You will begin with an overview of global financial markets and instruments that characterize the investment opportunities available to today’s investor. You will then learn how to construct optimal portfolios that manage risk effectively, and how to capitalize on understanding behavioral biases and irrational behavior in financial markets. You will learn the best practices in portfolio management and performance evaluation as well as current investment strategies. By the end of your Capstone Project, you will have mastered the analytical tools, quantitative skills, and practical knowledge necessary for long-term investment management success. To see an overview video for this Specialization, click here!...
Investment and Portfolio Management

Frequently Asked Questions

  • Once you enroll for a Certificate, you’ll have access to all videos, quizzes, and programming assignments (if applicable). Peer review assignments can only be submitted and reviewed once your session has begun. If you choose to explore the course without purchasing, you may not be able to access certain assignments.

  • When you enroll in the course, you get access to all of the courses in the Specialization, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page - from there, you can print your Certificate or add it to your LinkedIn profile. If you only want to read and view the course content, you can audit the course for free.

More questions? Visit the Learner Help Center.