注册 登录
上一主题：Behavioural Finance
下一主题：Quality of Schweser AI and PM Sections
返回列表 发帖
farrukhsadiq

Rank: 2

UID
223292 
帖子
219 
主题
105 
注册时间
2011-7-11 
最后登录
2013-9-10 
1# 跳转到 » 倒序看帖
打印
tT
发表于 2013-5-3 10:59 | 只看该作者

Behavioral Finance Read 7 page 45-46 EOC #5

reference, understand, different
Hello,
EOC question #5 page 45-46 has answer C
Can anyone elaborate on why it’s not answer A - Prospect theory? it says in the answer key that “loss aversion in prospect theory is discussed from a different perspective”
not sure I understand that? we have 2 phases and then our subjective probabilities which leads to risk seeking behavior.
Prospect theory would indicate that individuals hold onto their losers too long. it is based on a reference point as well.
Hopefully, someone can shed some light on the “different perspective”.
Thank you,

 

相关主题：

. Calc option payoff on a put

. reading 18 question 8 (cfai book)

. Intercorporate Investment

. LIFO vs. FIFO Question

. TBill / FF Rate question

收藏 分享

Houjichasan

Rank: 2

UID
223419 
帖子
295 
主题
13 
注册时间
2011-7-11 
最后登录
2014-8-7 
2#
发表于 2013-5-3 11:04 | 只看该作者
what are you trying to say?  it is not an equal change here … so where did the equal change appear on your statement from?

TOP

YAhmed

Rank: 2

UID
223437 
帖子
336 
主题
5 
注册时间
2011-7-11 
最后登录
2016-4-19 
3#
发表于 2013-5-3 11:07 | 只看该作者
hit it from the side like a bass drum

TOP

ba736

Rank: 2

UID
223349 
帖子
293 
主题
57 
注册时间
2011-7-11 
最后登录
2016-4-18 
4#
发表于 2013-5-3 11:08 | 只看该作者
Here is what we thought:
Prospect theory is a framework that attempts to describe the decision making process made by a human being and non-rational investor. Utility theory is the opposite, the framework for the rational investor, which is based on an absolute frame rather than a subjective one.
Utility theory tell us how to construct a portfolio in an objective manner, and comes up with mean-variance optimization. But in reality, many construct portfolios differently, for example they exhibit loss aversion.
This loss aversion is reflected in the example by the different bounds for selling a gain and a loss. A loss is only sold at -25%, presumably to allow a smaller loss to re-gain in value because the investor does not want to accept a loss easily.
Behavoural portfolio theory describes this and other phenomena which gives rise to different portfolios than those prescribed by mean-variance derived from utility theory.
Prospect theory is not the right answer, because it is a decision making framework which is probably the basis of behavioural portfolio theory BUT ONLY for specific frame that for example give rise to loss aversion. It says how we decide, and BPT says how we construct portfolios based on the how.

TOP

返回列表
上一主题：Behavioural Finance
下一主题：Quality of Schweser AI and PM Sections