Human Behavior and the Efficiency of the Financial System by Robert J. Shiller* Abstract Recent literature in empirical finance is surveyed in its relation to underlying behavioral principles, principles which come primarily from psychology, sociology and anthropology. The behavioral principles discussed are: prospect theory, regret and cognitive dissonance, anchoring, mental compartments, overconfidence, over- and underreaction, representativeness heuristic, the disjunction effect, gambling
Words: 18103 - Pages: 73
Is Skype worth $8.5 billion? An exercise in valuing young, growth companies Posted by Aswath Damodaran Wednesday, May 18, 2011 Last week, Microsoft announced that it would buy Skype for $8.5 billion. The reaction was fast, furious and very predictable. First, there was the search for reasons for the deal and technology mavens listed a few. Second, there was the reaction from investors and analysts, which was generally not very positive. Third, it was noted that Bill Gates, the face of Microsoft
Words: 1443 - Pages: 6
biggest market), investors might be wondering whether Walmart stock is a good buy, sell or hold. Does WMT stock still make sense as a good investment or should investors seek better opportunities somewhere else? Let's analyze some of the valuation, fundamental and technical variables to better determine whether Walmart stock is a good buy, sell
Words: 1450 - Pages: 6
The company I pick from S&P 500 is Google Inc., which is a multinational corporation specializing in internet-related service and products. Google has been estimated to be a rapidly growing global technology leader focused on improving the way people connect with information, and its trading stock price is remained really high and still on the rise. The expected sales are given by Capital IQ from year 2014 to year 2018, and their values are listed below in the table. By calculating the average
Words: 1317 - Pages: 6
Memorandum TO: FROM: DATE: September, 27 2013 RE: One-Page Memo on JetBlue Case Study The purpose of this memorandum is to discuss the JetBlue case study, and review my answers to the specified questions. I will elaborate as to which price I believe JetBlue should choose for their initial public offering (IPO), and why JetBlue should choose that price. The first step in determining JetBlue’s IPO price is analyzing specific ratios of publicly traded competitors in JetBlue’s
Words: 926 - Pages: 4
Warren Buffett Case Warren Buffett is the role model to all investors; therefore, I believe what he believed in is right (at least to him). However,we need to understand that not all of his rules work for everyone. Buffett's first rules is not to lose. The second rule is not to forget the first rule. He is absolutely right about this because risk management is always the key to success in investing. I think that valuing a share based on its relative performance to similar shares is a good strategy
Words: 677 - Pages: 3
FINC 554 Investment Banking Names: Ali Geramian & Dinh Ton Assignment: Date : Google, Inc. February 11, 2013 Section (circle) ____30______31______32____ This assignment exclusively represents our own work. We have not discussed this case or this assignment with anyone and have done no outside research unless specifically authorized to do so. We have not discussed this work with any other students past or current nor have we reviewed any related work product prepared by such
Words: 2006 - Pages: 9
Jorge Porres August 18, 2013 Investments Keiser University Week 3 Essays 1. Industry Life Cycle: Discuss the industry life cycle, how this concept can be used by security analysts, and the limitations of this concept for security analysis. The industry life cycle is made up of five stages: 1. Pioneer phase: This face is characterized by the high cost of production and the low demand of the product by the market. Mostly made up of start-ups. 2. Growth phase: When sales start to grow
Words: 527 - Pages: 3
stocks. “The initial source for the universe of firms was from FactSet, and consisted of all publicly traded stocks, that were classified as "Electric Utilities" under the Fact Set industry classification scheme.” FactSet is a company that provides computer-based financial data and analysis for financial professionals on global markets, public and private companies. The study started in 1972 with 80 publicly traded regulated utilities and ends in 2010 with 41 active regulated utilities. “This drop
Words: 1428 - Pages: 6
1. Calculate RU a. Find the unleveraged Betas of Home Furnishings, Shipbuilding and Automotive divisions by using market segment competitors as a comparable. See Exhibit 9. b. βD is assumed to be 0.1-0.3 based on comparable S&P ratings and ratios of debt to total capital in Exhibit 10. c. Risk free rate given to be 9.5% and market risk premium is 8.6% d. Use historical proportion of operating income by segment in Exhibit 4 to aggregate Congoleum’s unlevered beta e. Calculate RU using the CAPM
Words: 552 - Pages: 3
