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Unit 14: Rational Managers And Irrational Investors

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BLOCK VI – CORPORATE FINANCE

Unit 14: Rational Managers and Irrational Investors

Objectives

• Do investors truly act objectively? Behavioral money analysts Malcolm Baker and Joshua Coval don't think people are such chilly adding machines.
• Individual and even institutional financial specialists regularly offer into inactivity and clutch offers in undesirable stock.
• Far from acting in their own best advantage, numerous individual and institutional financial specialists are more inertial than consistent with regards to discharging their arrangement of undesirable shares.

• Behavioral money replaces the customary and romanticized thought of balanced chiefs with genuine and defective individuals who have social, subjective, and passionate inclinations.

• The subsequent inefficiencies in the capital markets can make open doors for venture directors and firms.
Structure

14.1 Introduction
14.2 Mispricing and the Goals of Managers
14.2.1 A Simple Heuristic Model
14.2.2 First Order Conditions
14.3 Examples of Managerial Actions Taking Advantage …show more content…

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