ICM302: Behavioural Finance

Module code: ICM302

Module provider: ICMA Centre; Henley Business School

Credits: 20

Level: 7

When you'll be taught: Semester 2

Module convenor: Dr Samah El Hajjar, email: s.elhajjar@icmacentre.ac.uk

Pre-requisite module(s):

Co-requisite module(s): IN THE SAME YEAR AS TAKING THIS MODULE YOU MUST TAKE ICM401 AND TAKE ICM402 (Compulsory)

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: NA

Academic year: 2024/5

Available to visiting students: No

Talis reading list: Yes

Last updated: 19 November 2024

Overview

Module aims and purpose

The aim of this module is to provide an essential understanding of behavioural finance as an alternative theoretical framework for traditional finance theories and demonstrate the applications of these theories in financial markets. This module is an introductory module to behavioural finance. It is positioned in the cross-section of finance and psychology theories and provides the connections between psychological principals and neo-classical finance principles. A variety of well-established cognitive biases/heuristics are examined and connections are made with the influence they have on the financial decision making and how to use psychological principals to interpret market anomalies and puzzles. It will help students build an awareness of psychological biases in financial decision making.

Module learning outcomes

By the end of the module, it is expected that students will be able to: 

• Compare and contrast motivations for, and uses of, behavioural finance and traditional finance theories 

• Identify the cognitive biases and heuristics relevant to financial decision making   

• Critically discuss the asset pricing anomalies and puzzles and elucidate the nature of the various types of speculative bubbles that may arise in financial markets  

• Recognise the impact of psychological principals to trading behaviour, corporate decisions, and individual behaviour.

Module content

Topic 1: The origins of behavioural finance 

Topic 2: The psychology of investing 

Topic 3: Applications of behavioural finance 

Topic 4: Asset pricing bubbles 

Topic 5: Behavioural corporate finance, corporate governance and ethics 

Topic 6: The economics of happiness

Structure

Teaching and learning methods

A combination of lectures and seminars. The interactive lectures will provide students a solid understanding of the topics covered for each week. During the seminars, students are guided through the solutions to the relevant pricing, hedging, and trading strategies exercises. Students will also be encouraged to work as a group during seminars. Discussion boards and office hours will be available for students during the semester.

Study hours

At least 32 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

Minimum mark of 50% weighted average mark

Summative assessment

Penalties for late submission of summative assessment

The Support Centres will apply the following penalties for work submitted late:

Assessments with numerical marks

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: /cqsd/-/media/project/functions/cqsd/documents/qap/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

Ongoing feedback throughout all lectures, seminars and workshops 

Reassessment

Additional costs