FIN 477: Behavioral Finance

This course will introduce students to behavioral finance, which is the intersection of psychology, economics, and finance. They will learn how individuals and firms make financial decisions and how these decisions might deviate from perceived rational or traditional choices. Students will explore the existence of psychological biases in financial decision-making and examine their impact on financial markets. The course will also explore the interplay of biases through a stock trading simulation.

Course Objective

This course is intended to introduce students to the irrational side of investing. Some things that happen in financial markets and corporate board rooms are entirely logical… some are not. By the end of this course, you should have a grasp on the basic teachings about human behavior from psychology and the ways that these ideas interact with actual financial decisions that people make. The course begins with an investment bootcamp to place everyone on a level playing field. It will then progress into understanding the human brain, the ways we make decisions, and the shortcuts involved. The majority of the course will explore the ways that psychology impacts investing decisions made by investors and by corporate managers. Prerequisite: ECON 102 and PSCYH 100

Course Structure

The course will be structured into the following Modules.

• Module 01: Investment Bootcamp
• Module 02: Foundations (of Behavioral Finance)
• Module 03: Behavioral Biases
• Module 04: Behavioral Aspects of Asset Pricing
• Module 05: Behavioral Elements of Corporate Finance
• Module 06: Investor Behavior
• Module 07: Social Influences

Course Structure

FIN 477 is segmented into seven (7) modules, which contain a series of lessons. Think of each lesson as a written lecture based upon a chapter in the book. The course schedule will outline the due dates for activities and assignments in each of the modules. It is very important for you to follow the course schedule. The course syllabus contains all the pertinent information about the course, but the following are critical elements to your success in the course. At the beginning of each lesson, you will find a list of learning objectives for that lesson. These learning objectives are what the quizzes and exams are based upon. Practice problems in the material, lesson-based assignments, and the weekly discussion forums will help you evaluate your understanding of the material. I will post questions each week for you to respond to and expand upon as the week progresses. You should review the guidelines and evaluation rubric, so you have an idea of what I am looking for (and grading). Outside of the module assignments, you will participate in two Stock Trak challenges. The activities are designed for you to apply some of the concepts learned in the course in a real-world simulation. You will also be responsible for completing a series of lesson-based quizzes and two exams based on the online material and textbook readings. You can always navigate back to the course home page by clicking on the blue “Home” in the upper left corner of the course.

Assignment Overview

Assignments

Orientation Items:  There are three items in the orientation module. The first is designed to test your understanding of course structure and the assignments. The second is designed to introduce you to each other to create a sense of virtual community. The third is designed to help me think about group assignments.

Exams: There are two exams in this class. The mid-term will cover all material in the first half of the class. The final exam is comprehensive, but it will have a heavy weighting to the material presented since the mid-term. Use the learning objectives given at the beginning of each lesson as a guide when preparing for the exams. The exams in this class are not curved. This class operates more like the real world. You either know the material or you do not. Both exams will be given in Canvas. They will be due on Sunday in the week labeled for the exam (unless otherwise indicated) and you will have a time limit for the exam. You can choose when you want to begin your exam during the week as long as it is submitted before midnight on the due date. The exam should be completed in one sitting, and questions will be delivered one at a time. There is no save button on the exams, but navigation is enabled so that you will be able to move between questions as you take the exam. Late submission of any timed assignment will be subject to the posted late policy on this syllabus.

Quizzes:  These quizzes are based on the material covered in each associated lesson. You will be given 1 attempt to take the quiz and must complete it in one sitting. There are 26 lesson-based quizzes in total. These quizzes are timed. There are two lessons for which you have a mini-paper in replacement of the quiz. These mini-papers will require more time than a quiz, so there is a small point increase for these mini-papers. On the quizzes, there is no save button, but assessment navigation is enabled so that you should be able to select a question and return to it if need be. Late submission of any timed assignment will be subject to the late policy posted below on this syllabus.

Special Projects: There are three (3) special projects, which are designed to enhance your understanding of a specific topic in an interesting way. I do not assign busy work because I do not want to grade busy work. There is a purpose for every assignment in this class. You will greatly increase your learning if you treat these assignments as something that you might show to an interviewer someday.

Trading Simulation: You will be engaging in a semester-long trading simulation. The software for this simulation is called Stock Trak. If you have taken FIN 420 already, then you will be excited to get to try your hand at investing again. There are several checkpoints for novice investors. The focal point of this simulation is the behavioral aspects that you notice in yourself. Performance is not the goal, although there are 5 bonus points if you beat the market. (Note: These are the only bonus points offered in this class). You will be able to trade mutual funds, ETFs, and individual stocks in this simulation. There will be a few focused group discussions, which are different from your normal weekly topics of discussion), that enable you to discuss strategy with your peers. Again, the focus of this simulation is behavioral elements, not performance. Feel free to share your investment ideas with your peers. Learn from each other, but be careful… not every opinion deserves real action.

Discussion forums: The discussion forums are conducted in Canvas. There are nine (9) week-based discussion forums listed on the course schedule. The grading rubric for these forums is available in the Orientation module and on each forum itself. You will be graded based on your effort, but also on the quality of your effort. Those who display evidence of thought leadership, critical thinking, and support their points with outside sources will earn the designation (and points) of “Executive” per the posted rubric. I believe that every student in this class can rise to executive-level communication if you put your mind to it. In these discussions, you need to post on three different days. Since they are all due on Sunday nights at midnight, this means that you must start by midnight on Friday in order to be eligible for full points. There are no late points for the discussion forums. They are locked in time since you are talking with and learning from your peers (who are also learning from your perspectives).

Grades

Letter grades will be based on the following scale:

Note: A grade of “C” or higher is required to pass the course. Final Course grades are based on the points earned in this class. Please do not ask for special treatment. All students are measured by the exact same measuring stick (points earned). There are no special assignments available to make up for bad grades on prior work. Grades in this course are not curved. If you have questions about course content, then you need to email the assigned instructor as the questions arise. The course instructor is very open to help you. Please reach out if you need help. All assignments are graded within one week of the assignment due date. You may turn in assignments early, but they will not be graded before the due date.  To reiterate, grades in this class are EARNED not given. In most weeks, there will be opportunities to earn points with quizzes and discussion forums.  Two separate assignments in Stock-Trak will also enable you to gain points beyond those earned through the Module-based exams and the comprehensive final. I do not curve any grades in this course. Please refer to the  University Grading Policy for Undergraduate Course for additional information about University grading policies. If you are prevented from completing this course for reasons beyond your control, you have the option of requesting a deferred grade from your instructor. For more information, please see “Deferred Grades” on the  Student Policies website.