Download GTU MBA 2019 Winter 3rd Sem 4539282 Behavioural Finance Question Paper

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GUJARAT TECHNOLOGICAL UNIVERSITY
Enrolment No.
MBA - SEMESTER- IIT EXAMINATION - WINTER 2019
Subject Code: 4539282
Subject Name: Behavioural Finance

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Time: 10:30 AM TO 1.30 PM
Date:02-12-2019
Total Marks: 70
Instructions:
1. Attempt all questions.

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2. Make suitable assumptions wherever necessary.
3. Figures to the right indicate full marks.

Q. No. Answer the following in brief Marks
Q.1 (a) Loss aversion bias 14

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(b) Classical thought of finance
(c) Illusion of knowledge
(d) Noise trading
(e) Benford’s law
(f) MICE

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(g) Hindsight bias

Q.2 (a) Identify the differences between rational / classical 07
finance and behavioral finance and explain them in
detail.

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(b) EMH states that investors are rational. Behavioral 07
finance states they are not. Justify your stand by
explaining market and investor behaviour supporting
your stand.
OR

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(b) Write a note on the below mentioned contributor of 07
behavioral finance:
1. Daniel Kahneman and Amos Tversky
2. Richard Thaler
3. Michael Pompain

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Q.3 (a) Write in detail some of the important heuristics. 07
(b) Differentiate cognitive and emotional bias. Explain 07
some the important emotional biases in detail.
OR

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Q.3 (a) How do biases interact? Explain various ways 07
through which one can overcome biases and
debiases.
(b) What is value investing? Write the value investment 07
behaviour of Warren Buffet.

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Q4 (a) What do you understand by anomaly? What are 07
different market anomalies as per behavioral
finance?
(b) How behavioral finance explains bubbles? Explain 07

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in detail various causes of bubbles.
OR
Q.5 (a) What is forensic accounting? Explain how does 07
FA in detecting corporate frauds.
(b) What is neurophysiology? Why the study of 07

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neurophysiology important for investment advisor?

Q.5 (a) The question is a matter of life and death: a new 07
disease is sweeping across the country, and
epidemiologists project it will claim the lives of 600

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people. Scientists have proposed two alternative
programs to address the outbreak, and you must
decide which to implement

• If program A is adopted, 200 people will be saved.
• If program B is adopted, there is a one-third probability that 600 people will be saved, but a two-third probability that no one will be saved at all.

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Which one do you select? Why?
(b) Explain in detail the prospect theory in line with the 07
above situation.
OR
(b) What are the key tenets of prospect theory? 07

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According to you, how would a gambler take the
decision in the above situation? Explain