Finance Essay Example | Topics and Well Written Essays - 250 words - 3

Finance - Essay Exampleormula also clearly generated risk associated with the investment and and then shows the possible measures to take in a given risk scenario in an investment.This is a financial plain stitch which proposes the use and application of psychology based theories which are used to explain the anomalies in the stock grocery. In this context, the assumption in behavioral finance is the characteristics of market participants and the information structure which systematically influences the investments individual ending in the market outcome. This evident in various stock exchange markets which investors have assumed on making the best decisions. In this area, there are numerous incidents of this phenomenon in the security market which contradicts the market hypothesis in the investors rationality. In this context, the behavioral finance hypothesis seems to attempt to cover and step in the investment void.In any investment, this theory states that it is totally impo ssible to beat the market due to the dexterity of the stock market which makes the existing shares to incorporate and thus reflecting the information which is relevant in accordance to this theory. It is therefore the investor purchases the undervalued stocks or eventually sells out the stock in inflated prices.Efficient Market Hypothesis (EMH) interpretation Investopedia. Investopedia - Educating the world about finance. N.p., n.d. Web. 27 Mar. 2013.