question a and b

assistant to both questions

Question One Discuss the salient features of a behavioural portfolio. Explain the differences between behavioural portfolio and portfolio thcory as articulated by Markowitz. (10 marks) a) b) Traditional finance argues that framing is transparent implying that investors can see through all the different ways cash flows may be described. According to Miller, "if you transfer a dollar from your left pocket to your right pocket you are no wealthier." However, according to behavioral finance, the form used to describe a problem has a bearing on decision making and security value. Required , Discuss the fllowing concepts clearly showing how they affect security valuation: i) Mental accounting ii) Narrow framing iii) Shadow ofthe past (5 marks) (5 marks) (5 marks) Question One Discuss the salient features of a behavioural portfolio. Explain the differences between behavioural portfolio and portfolio thcory as articulated by Markowitz. (10 marks) a) b) Traditional finance argues that framing is transparent implying that investors can see through all the different ways cash flows may be described. According to Miller, "if you transfer a dollar from your left pocket to your right pocket you are no wealthier." However, according to behavioral finance, the form used to describe a problem has a bearing on decision making and security value. Required , Discuss the fllowing concepts clearly showing how they affect security valuation: i) Mental accounting ii) Narrow framing iii) Shadow ofthe past