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Behavioral Finance- FIN 645

1. Answer all the following three (3) questions, worth 300 points or 30% of your total class grade. Score for each question is shown
in the parentheses at the end of each question. For qualitative questions,
maximum allowed pages are also given at the end of each question.
2. At submission time, you can ONLY submit a
maximum of TWO (2) files; one Excel file to be used ONLY for quantitative
questions that naturally require calculations, and one Word file for ALL
written/non-quantitative/qualitative responses. Warning: If you submit more
than two (2) files as stated,

QUESTION 1.
In your basic
finance/investment class you learned about risk according to the traditional
finance theory; which is based on market efficiency. In this class however you
learned new concepts, models, and theories about risk that were not taught in
your previous finance class or classes. Shefrin and Ackert & Deaves, as
well as the class discussions and assignments, did a fine job in helping you to
learn about risk from the behavioral finance perspective. With this brief
background, below is a three-part question for this segment of the exam.
Part I.Briefly summarize your understanding of
risk according to the traditional finance theory as alluded to in above. You
may state any theory, formula, or definition in a brief manner using the
standard finance terminology. Here I just want to see what you know about this
topic so it is important to display your knowledge on the issue.
Part II.Explain in details what else you learned
about risk in this class that was not covered in part I in above. Make sure
you stay on the topic which is the behavioral aspects of risk.This part is
the main part of the question and tests your knowledge of risk at this point in
this class.
Part III.Based on parts I and II in above, clearly
explainhow your cumulative knowledge of risk learned up to this point can
help you to become a better decision maker; that is:
a. A better investment professional, and
b. A better corporate
decision maker/manager.

Note: Points will be taken off for responses
that lack organization and order.
Maximum pages: 4 pages, double-space, size 12
Total Grade: 100

QUESTION 2.
This question tests
your understanding of Retirement Saving/Planning in light of your learned
knowledge of behavioral finance and related discussions in the present course.
Answer the following questions in the order givenand in needed details.

A. What are the specific risks associated with retirement saving and
planning? In your responses make sure you look at risk from both a traditional
finance as well as a behavioral finance perspective.
B. What can you, as a future retiree, do about the above risks that you
just listed? In other words, and as you plan and save for your retirement, how
can you manage and mitigate the above-listed risks? In your answers make sure
to include and explain any available model(s) that behavioral finance academics
and professionals have offered.
C. How much control
do you think you have over your own retirement savings? In other words, after
all said and done in above, do you really think you can reasonably count on
your retirement savings at the time of your retirement? If yes, explain how and
why. If no, explain your thoughts and the concerns that you may have regarding
the issue. Be organized in responding. This simply means present your
responses in an orderly and organized fashion. In other words, you do not want
to jump around in your responses. Points will be taken off for not being organized
in responding to the questions asked.
Maximum pages
allowed: four pages,
double-space, size 12; reference page(s) does not count in the maximum page
limit.
Total Grade: 100

QUESTION 3.
By expanding upon
Mary Meekers work on eBay valuation as discussed in chapter two of your
textbook, Shefrin discusses in details how heuristics, framing, and other
psychological factors can affect the way managers and analysts value companies.
He also discusses how calculation of Free Cash Flows could be manipulated and
possibly misused when it comes to arriving at a price for a given stock.
In this question,
I want to test your understanding of what exactly Shefrin tries to accomplish
in chapter two through both qualitative and quantitative arguments. To do that, consider that you have been
invited to present a workshop before a group of analysts and managers; and the
topic of your discussion is similar to the discussions presented in chapter two
of Shefrin on valuation which involves both concepts and numbers. I want you to
consider and expand upon boththe qualitative andquantitative
discussions that were used in that chapter. In this question and based on
what was stated in above, your job then is to prepare and submit to me the
needed lecture notes along with any related calculations that you would use in
your presentation. Your submission should then contain a fair amount of
conceptual/qualitative materials along with some supporting quantitative
analysis and/or examples. For such a purpose, feel free to use and
build upon the tables and numerical examples that are discussed in chapter 2.
Your quantitative analysis would certainly help the attendees to better
understand the points that you want to make in your presentation. For the
conceptual portion of your submission use one (1) Word file and for the
quantitative portion use one (1) Excel file.
Note: Points will be taken off for responses
that lack organization and order.
Maximum pages: 4 pages, double-space, size 12 for your
Word file. There is no page limit for using tables or Excel sheets/tabs
Total Grade: 100(50 points for the qualitative portion
in Word and 50 points for the quantitative portion in Excel)
End of the Final Exam!Behavioral Finance- FIN 645 1. Answer all the following three (3) questions, worth
300 points or 30% of your total class grade. Score for each question is shown
in the parentheses at the end of each question. For qualitative questions,
maximum allowed pages are also given at the end of each question. 2. At submission time, you can ONLY submit a
maximum of TWO (2) files; one Excel file to be used ONLY for quantitative
questions that naturally require calculations, and one Word file for ALL
written/non-quantitative/qualitative responses. Warning: If you submit more
than two (2) files as stated,QUESTION 1.In your basic
finance/investment class you learned about risk according to the traditional
finance theory; which is based on market efficiency. In this class however you
learned new concepts, models, and theories about risk that were not taught in
your previous finance class or classes. Shefrin and Ackert & Deaves, as
well as the class discussions and assignments, did a fine job in helping you to
learn about risk from the behavioral finance perspective. With this brief
background, below is a three-part question for this segment of the exam. Part I.Briefly summarize your understanding of
risk according to the traditional finance theory as alluded to in above. You
may state any theory, formula, or definition in a brief manner using the
standard finance terminology. Here I just want to see what you know about this
topic so it is important to display your knowledge on the issue. Part II.Explain in details what else you learned
about risk in this class that was not covered in part I in above. Make sure
you stay on the topic which is the behavioral aspects of risk.This part is
the main part of the question and tests your knowledge of risk at this point in
this class. Part III.Based on parts I and II in above, clearly
explainhow your cumulative knowledge of risk learned up to this point can
help you to become a better decision maker; that is: a. A better investment professional, and b. A better corporate
decision maker/manager. Note: Points will be taken off for responses
that lack organization and order. Maximum pages: 4 pages, double-space, size 12 Total Grade: 100 QUESTION 2.This question tests
your understanding of Retirement Saving/Planning in light of your learned
knowledge of behavioral finance and related discussions in the present course.
Answer the following questions in the order givenand in needed details.
A. What are the specific risks associated with retirement saving and
planning? In your responses make sure you look at risk from both a traditional
finance as well as a behavioral finance perspective. B. What can you, as a future retiree, do about the above risks that you
just listed? In other words, and as you plan and save for your retirement, how
can you manage and mitigate the above-listed risks? In your answers make sure
to include and explain any available model(s) that behavioral finance academics
and professionals have offered. C. How much control
do you think you have over your own retirement savings? In other words, after
all said and done in above, do you really think you can reasonably count on
your retirement savings at the time of your retirement? If yes, explain how and
why. If no, explain your thoughts and the concerns that you may have regarding
the issue. Be organized in responding. This simply means present your
responses in an orderly and organized fashion. In other words, you do not want
to jump around in your responses. Points will be taken off for not being organized
in responding to the questions asked. Maximum pages
allowed: four pages,
double-space, size 12; reference page(s) does not count in the maximum page
limit. Total Grade: 100 QUESTION 3.By expanding upon
Mary Meekers work on eBay valuation as discussed in chapter two of your
textbook, Shefrin discusses in details how heuristics, framing, and other
psychological factors can affect the way managers and analysts value companies.
He also discusses how calculation of Free Cash Flows could be manipulated and
possibly misused when it comes to arriving at a price for a given stock. In this question,
I want to test your understanding of what exactly Shefrin tries to accomplish
in chapter two through both qualitative and quantitative arguments. To do that, consider that you have been
invited to present a workshop before a group of analysts and managers; and the
topic of your discussion is similar to the discussions presented in chapter two
of Shefrin on valuation which involves both concepts and numbers. I want you to
consider and expand upon boththe qualitative andquantitative
discussions that were used in that chapter. In this question and based on
what was stated in above, your job then is to prepare and submit to me the
needed lecture notes along with any related calculations that you would use in
your presentation. Your submission should then contain a fair amount of
conceptual/qualitative materials along with some supporting quantitative
analysis and/or examples. For such a purpose, feel free to use and
build upon the tables and numerical examples that are discussed in chapter 2.
Your quantitative analysis would certainly help the attendees to better
understand the points that you want to make in your presentation. For the
conceptual portion of your submission use one (1) Word file and for the
quantitative portion use one (1) Excel file. Note: Points will be taken off for responses
that lack organization and order. Maximum pages: 4 pages, double-space, size 12 for your
Word file. There is no page limit for using tables or Excel sheets/tabs Total Grade: 100(50 points for the qualitative portion
in Word and 50 points for the quantitative portion in Excel)End of the Final Exam!”