Choose ONE of the following essay titles:
1. Select a bubble episode that occurred in financial markets at any point in time during financial history and discuss it. Your discussion should involve, amongst other things, what type of bubble you believe it was, how and why the bubble formed and what triggered the collapse. The behavioural aspects of the bubble should be clearly outlined.
2. Select and explain one particular cognitive bias/heuristic. Make reference to examples of academic research revolving around it. Discuss its impact on certain types of financial practitioners, activity or phenomena. Can the problem(s) it creates be combated – and how?
3. Select one of the sectors that you predict is likely to generate a bubble in the coming decade and discuss: i) the type of bubble most likely to generate and why and ii) how this bubble is likely to evolve based on the KMM model.
4. Critically discuss the possible behavioural motivations of one type of corporate financial decisions. Your discussion should include, amongst other things: i) the connections among those motivations and ii) their association with other established biases and heuristics.
5. Although a closed-end funds’ fundamental value is reflected via its net asset value, evidence suggests that investors in those funds tend to be prone to noise trading and herding. Discuss possible reasons as to why, despite the public availability of fundamental-value information about closed-end funds, investors still choose to noise trade on them.
Pick only 1 of the 5 questions above and the word count should be around 2700. Don’t include references into the word count.
Marking Criteria for the Behavioural Finance Essay
Feedback will take the form of the mark awarded and a set of comments discussing the strengths and weakness of that particular essay. I am looking for the following attributes for an outstanding essay:
o Clear and logical structure, including an introduction and a concluding paragraph (15%)
o Collection and analysis of appropriate (academic) literature, not just popular pieces and not Wikipedia (20%)
o Imaginative thinking but applied specifically to the question answered (15%)
o Inclusion / discussion of principles from behavioural finance (15%)
o Well-reasoned arguments and analysis (20%)
o High standard of presentation including good grammar/spelling (10%)
o Correct referencing (Harvard style) of any existing work cited (5%).
Type of assignment: Academic paper writing
Type of assignment: Essay
Number of sources: 10
Academic level: Bachelor
Paper format: Harvard
Line spacing: Double
Language style: UK English