MANAGEMENT AND REGULATION OF FINANCIAL MARKETS

The course is an elective activity of the Degree program and complements other courses in Finance in understanding the drivers and mechanisms that characterize financial markets. By focusing on understanding the roots and implications of seemingly irrational individual decision-making in financial contexts, the course contributes to strengthening the understanding of international financial markets via a focus on the role of individual investors. This course provides the theoretical tools to understand the reasons, the strengths and the limits of behavioural finance for the practice of portfolio management and financial advisory, addressing the role and relevance of new investment opportunities like sustainable or complementary pension products.

Upon completion of the course students will have a broader understanding of the complex and multi-dimensional scope of financial decision-making. The basic knowledge of financial market characteristics and basic properties already developed in other courses will be complemented by the broader understanding of the patterns of human decision-making under risk and uncertainty.
In terms of knowledge and understanding, the students will:
- understand the limitations of traditional models of financial decision-making;
- understand how alternative models of financial decision-making have been developed starting from behavioural empirical evidence;
- understand the role of emotions in financial decision-making;
- learn about the alternative theories underlying heuristics and understand the rationale behind them.
- learn about financial advisory services and hoe behavioral theories may support it
- understand the relevance of the behavioral perspective in the development and diffusion of novel financial products like sustainable products or voluntary pension schemes.

Regarding the application of knowledge and understanding, the students will:
- learn to relate behavioural theories to real-life empirical evidence;
- understand how behavioural theories have informed and shaped portfolio theories and portfolio management;
- understand how modern financial advisory can be aided by behavioural findings, especially when dealing with new financial products.

In terms of judgement abilities, the students will:
- learn to compare critically alternative explanations of empirical evidence from financial markets, and to discuss solutions in class discussions.

Students are expected to have a basic knowledge of financial markets and their functioning and on individual decision-making, in particolar what concern the role of utility functions.

1. Introduction: what is behavioral finance?
2. Individual behavior: behavioral biases, heuristic behavior, emotional implications, Prospect Theory and financial decision-making implications
3. Anomalies in financial markets: inefficient markets, behavioral foundations and implications
4. International financial markets: regulatory overview
5. Financial advisory and portfolio management: from traditional to behavioral tools
6. Sustainability and future: new financial products and behavioral finance

The textbook has not yet been defined but will be soon.

The final evaluation will take the form of a written exam with open-ended and multiple-choice questions. Besides the written exam, some extra activities may be completed to supplement the final grade. These activities contribute to the final grade only when the grade in the written exam is equal to 18/30 or above.

Regarding the grading scale (the manner in which grades will be assigned), regardless of whether one is attending or not attending:

A. Scores in the range of 18-22 will be attributed in the presence of:

Sufficient knowledge and applied understanding in reference to the program;
Limited ability to collect and/or interpret data, formulating independent judgments;
Sufficient communication skills, especially in relation to the use of specific language pertaining to the economic functioning of public services;
B. Scores in the range of 23-26 will be attributed in the presence of:

Fair knowledge and applied understanding in reference to the program;
Fair ability to collect and/or interpret data, formulating independent judgments;
Fair communication skills, especially in relation to the use of specific language pertaining to the economic functioning of public services;
C. Scores in the range of 27-30 will be attributed in the presence of:

Good or excellent knowledge and applied understanding in reference to the program;
Good or excellent ability to collect and/or interpret data, formulating independent judgments;
Fully appropriate communication skills, especially in relation to the use of specific language pertaining to the economic functioning of public services;
D. Honors will be attributed in the presence of excellent knowledge and applied understanding in reference to the program, excellent judgment ability, and excellent communication skills.

The course will be characterized by frontal lectures by the instructor and guided class discussions and voluntary individual and group assignments, where students will put into practice some of the notions developed during the course.

Italian

The Covid 19 emergency may impact teaching and exam modalities in the interest of students.

Accessibility, Disability and Inclusion
Accommodation and support services for students with disabilities and students with specific learning impairments

Ca’ Foscari abides by Italian Law (Law 17/1999; Law 170/2010) regarding support services and accommodation available to students with disabilities. This includes students with
mobility, visual, hearing and other disabilities (Law 17/1999), and specific learning impairments (Law 170/2010). If you have a disability or impairment that requires accommodations (i.e., alternate testing, readers, note takers or interpreters) please contact the Disability and Accessibility Offices in Student Services: disabilita@unive.it.

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