Investment Analysis and Portfolio Management Review Essay

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Nqnz10

Business Finance

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You are expected to write reviews of the week’s reading and videos for the discussion, these reviews should include current examples, opinions, and references and be at least 1000 words. 

Explanation & Answer:
1000 words
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Running head: BEHAVIORAL FINANCE

Behavioral Finance
Student’s Name
Institutional Affiliation

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BEHAVIORAL FINANCE

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Behavioral Finance

Financial decision making requires the implementation of effective regulations.
Similarly, different disciplines like psychology and economics, influence the nature of the rules
utilized in making rational judgments. The decisions made in life rely on the need to maintain
happiness. Equally, the choices made regarding emotional and economic situations must result in
the achievement of long term objectives. Similarly, the actions that result in personal satisfaction
depend on external factors like government regulations and economic conditions. According to
Daniel Kahnemann article on Behavioral Finance, the theory of behavioral finance is critical in
the implementation of commercial plans. Kahnemann is a Professor in Psychology at the
Princeton University (BCC Speaker, 2018). However, Kahnemann indicates that some of the
choices made by financial managers rely on irrational thoughts. As such, the decisions focus on
the short term rather than long term needs.
Similarly, the managers end up with the selection of inadequate measures. According to
the psychologist, the majority of the decisions made by the investors result in irrational
judgments. The model proposed by the speaker indicates that the cognitive ability of the
individuals influences the choices made during the investment processes. As such, the decisions
are the emotional nature of the investors. Kahnemann feels that psychology plays a significant
role in the formulation of market choices. Since individuals involved in the process make several
choices following emotional perceptions, the final decision significantly affects economic
perform...

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