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Behavioral Finance Spring Semester, 2022 The Guidelines for the Group Project As investment advisors you will present to the CFO and other investment advisors your critical analysis on your investor's...

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Behavioral Finance
Spring Semester, 2022
The Guidelines for the Group Project
As investment advisors you will present to the CFO and other investment advisors your critical analysis on your investor's type and behavioral biases along with presenting your suggested asset allocation that is appropriate for your investor.
Each group should include the followings in the professional report and presentation:
1) Investor Background, each group should:
· Describe the investor's demographic profile in details (including gender, education, background, age, occupation, income and wealth).
· Each group should indicate how investor's demographic background impact his/her investment behavior.
2) Investor Analysis: Based on your questionnaire and interview with the investor (include the questions and the answers in the presentations and professional reports), each group should:
· Identify the investor's Passive or Active Traits
· Describe the investor personality (lifestyle, stable, information, goal setting)
· Describe and explain the investor type ( Preserver, Follower, Independent, Or Accumulator)
· Indicate and explain the investor's risk tolerance level (low, medium, high).
· Describe the investor's confidence and investment literacy levels.
· Describe and explain the investor's investment horizon (short, medium, long).
3) Investor's behavioral biases: Each group should:
· Explain in details the process of identifying the investor's two assigned behavioral biases.
· Describe the assigned behavioral biases and associate them with the investor background, type, personality risk tolerance, and investment horizon.
· Indicate the primary bias based on your investor type.
· Provide a professional advice for your investor based on his/her behavioral biases.
4) Investor's Suggested Portfolio: Each group should:
· Build a pyramid with different layers based on the investor's goals, demands, investor's type and behavioral biases (Explains each layer).
· Indicate and explain whether you will adapt or moderate your investor's behavioral biases.
· Explain in details the suggested asset allocation and how such asset allocation is the most suitable for your investor and his/her behavioral biases.
· Construct a portfolio that is suitable for your investor based on his/her behavioral biases and investor type.
***The professional report should include the above four points (explained in details and with critical analysis). It must be professionally well written
Answered 2 days After Feb 01, 2022


Sandeep answered on Feb 04 2022
116 Votes
    71.76 %
    below 25 yrs.
    25 – 35 yrs.
    36 – 45 yrs.
    46 – 55 yrs.
    above 55 yrs.
    Marital Status
    Un Ma
    Education status
    School level
    Post Graduate
    No Formal education
    Less than one yea
    One – five years
    five – ten years
    Above 10 years
Data Analysis and Interpretations of the above table is as below: Demographic variable such as age, gender, marital status, education level, experience in share market and type of investor are considered as the main influencing variable that affects the investors’ investment decision. Analysis of group of investor indicates impact of his/her investment behaviour as below:
Observation 1: Majority 71.76% of the respondents are Male. 33.82% belong to the Age group of 36 - 45 years. Majority (78.24 %) of the investor are ma
ied. Nearly (35.88%) have completed their Graduation. Nearly 36% of the respondents have five to ten years of experience in share market.
Observation 2: It disapproves notion that mostly age of 25-35 people like to invest as they don’t have any obligation baggage or pre-conceived notions. More than 36% are graduate which proves that education has some role to play in investment decisions as people are able to make informed and calculated risky decision.
Observation3: Further tests prove that there is significant difference between gender and their level of emotional tolerance. It can be concluded that the level of emotional tolerance differs from men and women in their financial investment decision making, especially in share market, the place where risk plays a heavier role.
Observation 4: All type of investors(Short-term, Long term or intraday) are immune to importance attached to Dividend, Bonus and Rights issue , split issue and Earning report announcements .There is no impact on investor behaviour of such significant announcement.
Observation 5: The results indicate that gender of respondents has a huge impact on the investors’ behaviour. This indicated the need for gender parity in stock markets and thus facilitate entry of women in the Stock Exchange Industry. With the majority of the participants being in the 36-45age group implied some experience in financial assets investments domain does benefit the capital markets. In the end to summarize study suggest that the personality of an investor influences the investment patterns and types of investments made.
    No. of Respondents
    Portfolio Wealth
    500K – 1M
    1M – 5M
    High School
    Post Graduate
    Marital status
    Occupation Status
    Not Employed
Results of Socially responsible investor is as follow:
Observation 1: More than 59% of the respondent held portfolio worth $5, 00,000 and over 33% held portfolio more than $ 1million. Vast majority of respondents around 90% were male, and two-thirds were over 60 (65 %) and retired. More than 72 % held a post bachelor degree, and above 80 % were ma
Observation 2: Higher education levels were associated with greater percentage of active participant who are making Investments.
Observation 3: Significantly more investors are self-employed and significantly less are retired.
Observation 4: The concentration of investor is more in wealth portfolio > $1million and < $5 million. Hence it can be deduced that investor...

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