Question: Based on What you learned during this course discuss the following 1. Investors and other financial market participants act in a less than fully rational
Based on What you learned during this course discuss the following
1. Investors and other financial market participants act in a less than fully rational fashion due to cognitive limitations, overconfidence, and emotions. on the other hand, other investors and other financial market participants who act in a more rational fashion may take advantage of the valuation mistakes made by irrational investors. Discuss comprehensively;
a. what are these cognitive limitations, overconfidence strains, and emotions. b. how they affect investors' Decisions c. which one of them has a greater impact on the investor's decisions d. why there are different levels of investors rationality e. How rational investors take advantage of the valuation mistakes made by irrational investors
2. then discuss the following findings; a. researchers have found that cognition and emotion have complementary effects, b. Decision-makers whose emotions appear to be in balance perform the best. c.Uncertainty and risk are experienced differently in our brain, as are gain versus losses and risk vs. Return.
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