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1.
TITLE:
Research theories of behavioural economics and behavioural
finance to explain the influence of emotion on financial decisions
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2.
UNIT STANDARD NUMBER:
242557
3.
LEVEL ON NQF:
6
4.
CREDITS:
4
5.
FIELD:
Sub Field:
Business, Commerce and Management Studies
Finance, Economics and Accounting
6.
PURPOSE:
This Unit Standard introduces behavioural finance and economics as a means to
explaining the role of emotions in financial decision making. It will be useful for
Intermediaries, Financial Advisors, Investment Consultants, Bankers and Financial
Planners.
The qualifying learner is capable of:
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Explaining the effect of emotion on financial decisions and long term wealth
accumulation.
Applying knowledge of behavioural finance to explain investor behaviour.
Discussing how behavioural economics can contribute to understanding market
behaviour.
Analysing how financial services organisations respond to behavioural decisions
on the part of the market.
LEARNING ASSUMED TO BE IN PLACE:
It is assumed that learners are competent in Communication and Mathematical Literacy
at NQF Level 4 and are working towards or have a Level 5 Financial Services
Qualification or equivalent.
8.
SPECIFIC OUTCOMES AND ASSESSMENT CRITERIA:
Specific Outcome 1:
Explain the effect of emotion on financial decisions
and long term wealth accumulation
Assessment Criteria:
1.1
Theories of behavioural finance and behavioural economics are researched to
explain investment behaviour.
1.2
Systematic biases that cause investors and the markets to behave irrationally are
analysed with reference to recent events.
1.3
Standard economic theory and behavioural economic theory are compared with
examples.
Specific Outcome 2:
Apply knowledge of behavioural finance to explain
investor behaviour
Assessment Criteria:
L6 behavioural finance 18 June 2006
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2.1
Patterns or irrational investor behavior are analysed with reference to how these
patterns influence decisions.
2.2
Behavioural finance theory is applied to identify and explain a client’s irrational
investment decision and to enable an intermediary to influence the client to make
an informed decision.
Specific Outcome 3:
Discuss how behavioural economics can contribute to
understanding market behaviour
Assessment Criteria:
3.1
Market behaviour is analysed with reference to volume, volatility and predictable
influence on asset prices.
Specific Outcome 4:
Analyse how financial services organisations respond
to behavioural decisions on the part of the market
Assessment Criteria:
9.
4.1
Behavioural theory is applied to explain current trends in market or client
behaviour.
4.2
An organisation’s response to irrational decisions on the part of the market is
analysed with reference to how an organisation attempted to counteract the
trend.
ACCREDITATION AND MODERATION:
1. Anyone assessing a candidate against this Unit Standard must be registered as
an assessor with the relevant ETQA or ETQA where a Memorandum of
Understanding (MOU) exists with the relevant ETQA.
2. Any institution offering learning that will enable achievement of this Unit Standard
must be accredited as a provider through the relevant ETQA or ETQA where a
Memorandum of Understanding (MOU) exists with the relevant ETQA.
3. Moderation of assessment will be overseen by the relevant ETQA according to
the moderation guidelines and the agreed ETQA procedures.
10.
RANGE STATEMENT:
The typical scope of this Unit Standard is behavioural finance and behavioural
economics as a way of explaining irrational investor behaviour.
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NOTES:
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CRITICAL CROSS FIELD and DEVELOPMENTAL OUTCOMES:
This Unit Standard supports in particular, the following Critical Cross-field
Outcomes at Level 6:
1. The learner is able to collect, organise and critically evaluate information in
analysing the underlying investment options of different investment vehicles
and researching behavioural finance and behavioural economics.
2. The learner is able to communicate effectively in explaining the role of
emotions in financial decisions.
3. The learner is able to see the world as a set of related systems in
understanding the relationship between emotions, behaviour and economics.
Search words: behavioural finance; behavioural economics, emotional finance
L6 behavioural finance 18 June 2006
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