Investor Psychology

IOP3708 ASSIGNMENT 7 SEMESTER 2 2025 QUESTION 1 1.1. Critically discuss the triunity theory of the market, focusing on the dynamics of mood, mind, and body as they relate to the human brain. Discuss how these dynamics influence market focus, research metrics, and associated behavioural practices. QUESTION 2 2.1. Critically describe how the four continuums or polarities of the MBTI (Myers-Briggs Type Indicator) are used to understand money behaviour and decisions. Relate this to the ...

IOP3708 ASSIGNMENT 7 SEMESTER 2 2025 The study of behavioural finance bridges the gap between traditional economic theory and the complex realities of human psychology in financial decision-making. Traditional finance assumes that investors are rational actors who process information efficiently and always act to maximise utility. However, behavioural and neurofinance research demonstrates that real-world investors are influenced by a combination of emotions, cognitive biases, and psycholog...

IOP3708 ASSIGNMENT 7 SEM 2 2025

IOP3708 ASSIGNMENT 7 SEMESTER 2 2025 EXCEL Table of Contents Introduction 2 QUESTION 1 2 1.1 The Triunity Theory of the Market: Mood, Mind, and Body 2 1.1.1 The Mood of the Market: Emotional Sentiment and Risk Attitude 3 1.1.2 The Mind of the Market: Cognitive Processes and Decision Biases 3 1.1.3 The Body of the Market: Observable Manifestations in Price and Volume 4 1.1.4 Influence on Market Focus, Research Metrics, and Behavioural Practices 4 QUESTION 2 5 2.1 The MBTI Framework an...

IOP3708 ASSIGNMENT 4 SEMESTER 1 2025 Table of Contents Introduction 2 QUESTION 1 3 1.1. Briefly explain three theoretical foundations that support the concept of market efficiency. (5 marks) 3 1. Investor Rationality as a Foundation of Market Efficiency 3 2. Uncorrelated Investor Errors and Market Price Accuracy 3 3. No Limits to Arbitrage and the Self-Correcting Market Mechanism 3 4. Supplementary Theories Supporting Market Efficiency 4 QUESTION 2 5 2.1 In the context of the psychol...

IOP3708 ASSIGNMENT 3 SEMESTER 1 2025

IOP3708 ASSIGNMENT 3 SEMESTER 1 2025

IOP3708 ASSIGNMENT 3 SEMESTER 1 2025 Momentum is the anomaly that gives those subscribing to efficient markets the most trouble. Critically explain this statement. Behavioural finance has gained more recognition in recent years as it has been discovered that traditional finance theory does not fully explain market crashes and other anomalies. This field of finance combines psychology and sociology to gain a better understanding of investor behaviour, which may provide a more comprehensive...

IOP3708 ASSIGNMENT 3 SEMESTER 1 2025 ELITE 1.1. Momentum is the anomaly that gives those subscribing to efficient markets the most trouble. Critically explain this statement. (5 marks)

IOP3708 ASSIGNMENT 3 SEMESTER 1 2025 BMZ The field of finance has traditionally rested on the assumptions of rational decision-making, efficient information dissemination, and logical price adjustments. However, real-world financial markets often deviate from these ideals, as evidenced by market bubbles, crashes, and persistent anomalies such as momentum and herding. These inconsistencies have sparked increasing academic and professional interest in behavioural finance a discipline that integ...