This course is part of the Investment and Portfolio Management Specialization

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stars
265 ratings

Arzu Ozoguz

16,512 already enrolled

Offered By

Investment and Portfolio Management SpecializationRice University

About this Course

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Investors tend to be their own worst enemies. In this third course, you will learn how to capitalize on understanding behavioral biases and irrational behavior in financial markets. You will start by learning about the various behavioral biases – mistakes that investors make and understand their reasons. You will learn how to recognize your own mistakes as well as others’ and understand how these mistakes can affect investment decisions and financial markets.  You will also explore how different preferences and investment horizons impact the optimal asset allocation choice.
After this course, you will be more effective in overcoming biases to do the wrong things at the wrong times and tailoring an investment strategy that is best suited on your or your client’s profile and investment needs.

Flexible deadlines

Reset deadlines in accordance to your schedule.

Shareable Certificate

Earn a Certificate upon completion

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Coursera Labs

Includes hands on learning projects.

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Course 3 of 5 in the

Investment and Portfolio Management Specialization

Approx. 15 hours to complete

English

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Skills you will gain

Behavioral Finance
Cognitive Bias
Investment
Behavioral Economics

Flexible deadlines

Reset deadlines in accordance to your schedule.

Shareable Certificate

Earn a Certificate upon completion

100% online

Start instantly and learn at your own schedule.

Coursera Labs

Includes hands on learning projects.

Learn more about Coursera Labs

Course 3 of 5 in the

Investment and Portfolio Management Specialization

Approx. 15 hours to complete

English

Could your company benefit from training employees on in-demand skills?

Try Coursera for Business

Instructor

Instructor rating

4.47/5 (19 Ratings)

Arzu Ozoguz

Finance Faculty

Jones Graduate School of Business

119,199 Learners

4 Courses

Offered by

Rice University

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Syllabus - What you will learn from this course

Week1

Week 1

5 hours to complete

Efficient markets hypothesis and limits of arbitrage

This module introduces the third course in the Investment and Portfolio Management Specialization. In this module, we first present the efficient market hypothesis (EMH) – another pillar idea of modern finance. You will learn about its rationale as well as the empirical evidence that supports and challenges the predictions of the EMH such as anomalies. Finally, we will consider why smart money may sometimes fail to exploit away anomalies in financial markets.

5 hours to complete

9 videos (Total 67 min), 12 readings, 4 quizzes

9 videos

Introduction and welcome to class4mEfficient Markets Hypothesis (EMH)7mExamples of market efficiency: Market efficiency in real time3mThree Versions of Efficient Market Hypothesis9mEvent studies6mAnomalies13mMutual fund and analyst performance9mSmart investor should make markets efficient, right?8mEfficient Market Hypothesis2m

12 readings

Grading Policy10mHow to use discussion forums10mMeet & Greet: Get to know your classmates10mPre-Course Survey10mWatch market efficiency in real time10mReal Time Market Efficiency10mLecture Handouts: Efficient Markets Hypothesis (EMH)10mLecture Handouts: Are markets efficient?10mEntreMed Case10mNew Facts in Finance (optional)10mLecture Handouts: Limits to arbitrage10mModule 1: Quiz solutions10m

3 practice exercises

Efficient markets hypothesis30mAre markets efficient?30mEfficient markets and limits of arbitrage30m

Week2

Week 2

4 hours to complete

Biases and realistic preferences

In this module, we review the behavioral critique of market rationality. In contrast to the presumption that investors are rational, behavioral finance starts with the assumption that they are not. We will examine some of the information-processing and behavioral biases uncovered by psychologists in several contexts. In addition, we will consider alternative, more realistic ways of describing investor preferences.

4 hours to complete

12 videos (Total 75 min), 10 readings, 2 quizzes

12 videos

Introduction4mWhat are heuristics-driven biases?3mRepresentativeness9mConservatism and anchoring6mOverconfidence7mFrame dependence9mMental accounting11mRealistic preferences3mLoss aversion or Prospect theory9mHabit utility4mCatching up with the Joneses3mBiases and realistic preferences2m

10 readings

Lecture handouts: Heuristics-driven biases10mAdditional heuristic-driven biases (required)10mHeuristics and Biases in Retirement Savings Behavior (optional)10mBehaving Badly (optional)10mSeven Sins of Fund Management (optional)10mLecture handouts: Frame dependence10mLecture Handouts: Preferences10mThe Psychology and Neuroscience of Financial Decision Making10mPsychology of what we do with our money (optional)10mModule 2: Quiz solutions10m

2 practice exercises

Heuristic driven biases and frame dependence30mBiases and realistic preferences30m

Week3

Week 3

5 hours to complete

Inefficient markets

5 hours to complete

9 videos (Total 72 min), 2 readings, 4 quizzes

9 videos

Introduction2mEquity premium puzzle9mVolatility puzzle12mClosed-end fund puzzle10mExamples from Closed-End Country Funds5mLong-run reversals11mValue effect10mMomentum9mSummary1m

2 readings

Lecture handouts: Applications – the Aggregate Stock Market10mLecture handouts: Applications – The cross-section of average stock returns10m

2 practice exercises

Applications – the Aggregate Stock Market30mApplications – The cross-section of average stock returns30m

Week4

Week 4

2 hours to complete

Applications: Investor behavior

2 hours to complete

6 videos (Total 24 min), 3 readings, 2 quizzes

Reviews

4.6

36 reviews

5 stars
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2 stars
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1 star
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TOP REVIEWS FROM BIASES AND PORTFOLIO SELECTION

by AMJun 19, 2019

Excellent course material

Thoroughly enjoyed the course

by MAJun 5, 2022

Excelent course. And it's wonderful to better understand how psicology relates to finance decisions.

by RDDec 5, 2018

I've tried a few courses that are similar and this one is better than average.

by ASSep 25, 2019

An excellent course combining psychology and behavioral biases with finance. An eye-opener for students and managers relying exclusively on quantitative techniques to solve finance problems.

View all reviews

About the Investment and Portfolio Management Specialization

In this four-course Specialization, you’ll learn the essential skills of portfolio management and personal investing.

All investors – from the largest wealth funds to the smallest individual investors – share common issues in investing: how to meet their liabilities, how to decide where to invest, and how much risk to take on. In this Specialization, you will learn how to think about, discuss, and formulate solutions to these investment questions. You will learn the theory and the real-world skills necessary to design, execute, and evaluate investment proposals that meet financial objectives. You will begin with an overview of global financial markets and instruments that characterize the investment opportunities available to today’s investor. You will then learn how to construct optimal portfolios that manage risk effectively, and how to capitalize on understanding behavioral biases and irrational behavior in financial markets. You will learn the best practices in portfolio management and performance evaluation as well as current investment strategies. By the end of your Capstone Project, you will have mastered the analytical tools, quantitative skills, and practical knowledge necessary for long-term investment management success. To see an overview video for this Specialization, click here!

Frequently Asked Questions

When will I have access to the lectures and assignments?
Access to lectures and assignments depends on your type of enrollment. If you take a course in audit mode, you will be able to see most course materials for free. To access graded assignments and to earn a Certificate, you will need to purchase the Certificate experience, during or after your audit. If you don't see the audit option:
The course may not offer an audit option. You can try a Free Trial instead, or apply for Financial Aid.
The course may offer 'Full Course, No Certificate' instead. This option lets you see all course materials, submit required assessments, and get a final grade. This also means that you will not be able to purchase a Certificate experience.
What will I get if I subscribe to this Specialization?
When you enroll in the course, you get access to all of the courses in the Specialization, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page - from there, you can print your Certificate or add it to your LinkedIn profile. If you only want to read and view the course content, you can audit the course for free.
Is financial aid available?
Yes. In select learning programs, you can apply for financial aid or a scholarship if you can’t afford the enrollment fee. If fin aid or scholarship is available for your learning program selection, you’ll find a link to apply on the description page.

More questions? Visit the Learner Help Center.

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Biases and Portfolio Selection

About this Course

Skills you will gain