0 POLYTECHNIC UNIVERSITY OF THE PHILIPPINES Department of Financial Management College of Accountancy and Finance A. Mabini (Main) Campus, Sta. Mesa, Manila FIMA 3 71 Behavioral Finance Christian Neil A. Ramos Ria S. Fajilago Allan A. Calderon 1 Behavioral Financ e FIMA 371 Christian Neil A. Ramos R ia S. Fajilago Allan A. Calderon 2 ALL RIGHTS RESERVED. No part of this learning module may be reproduced, used in any form, or by any means graphic, electronic, or mechanical, including photocopying, recording, or information storage and retrieval system without written permission from the authors and the University Published and distributed by: Polytechnic University of the Philippines address website email Tel. No.: 3 The VMP GO VISION PUP: The National Polytechnic University MISSION Ensuring inclusive and equitable quality education and promoting lifelong learning opportunities through a re - engineered polytechnic university by committing to: • provide democratized access to educational opportunities for the holistic development of individuals with global perspective • offer industry - oriented curricula that produce highly - skilled professionals with managerial and technical capabilities and a strong sense of public service for nation - building. • embed a culture of research and innovation. • continuously develop faculty and employees with the highest level of professionalism • engage public and private institutions and other stakeholders for the attainment of social development goal • establish a strong presence and impact in the international academic community 4 PHILOSOPHY As a state university, the Polytechnic University of the Philippines believes that: • Education is an instrument for the development of the citizenry and for the enhancement of nation - building ; and, • That meaningful growth and transformation of the country are best achieved in an atmosphere of brotherhood, peace, freedom, justice and nationalist - oriented education imbued with the spirit of humanist internationalism. SHARED VALUES AND PRINCIPLES 1. Integrity and Accountability 2. Nationalism 3. Sense of Service 4. Passion for Learning and Innovation 5. Inclusivity 6. Respect for Human Rights and t he Environment 7. Excellence 8. Democracy GOALS OF THE COLLEGE The College of Accountancy and Finance aims to: ▪ Ensure the development of globally competitive professionals, managers and leaders in the field of accountancy, finance and other allied disciplines through excellent and relevant and responsive accountancy and finance education accessible to all Filipinos specifically to the socio economically disadvantaged population 5 ▪ Ascertain the generation and diffusion of knowledge and technologies in the broad range of disciplines, relevant and allied to accountancy and finance through continuing education and research, information and communication technology, networking, and link ages with local, national and foreign organization ▪ Strengthen/enhance its organizational capability to become the leader in advocating reforms and innovations and fulfilling its social responsibility commitment through research and development studies, and extension and consultative services PROGRAM DESCRIPTION The Bachelor of Science in Business Administration Major in Financial Management is a four - year degree program that aims to strengthen students’ communication, critical, creative and analytical skills necessary for sound financial decision making cognizant of a dynamic domestic and global business environment and mindful of their role in nation building It develops students as ethical, innovative, independent, and resilient finance professionals equipped with relevant 21st century skills, adept in financial technology, with strong service orientation and organizational skills, committed to continuing prof essional development responsive to the requirements of the various careers in financial management and allied fields. COURSE DESCRIPTION This course aims to provide students with a basic understanding of finance concepts and techniques as applied in the global setting. It gives students with a solid understanding of financial linkages among economies including exchange rates, interest rates , balance of payments, currency derivatives, sovereign debt and foreign 6 investment flows. The main focus of the course would be the financial implications of the rapid integration of national economies worldwide through trade and financial flows. Additionally, electronic banking shall be introduced as a trading tool. INSTITUTIONAL LEARNING OUTCOMES (ILOS) 1 . Critical and Creative Thinking. Graduates use their rational and reflective thinking as well as innovative abilities to life situations in order to push boundaries, realize possibilities, and deepen their interdisciplinary, multidisciplinary, and/or transdisciplinary understanding of th e world. 2. Effective Communication Graduates apply the four macro skills in communication (reading, writing, listening, and speaking), through conventional and digital means, and are able to use these skills in solving problems, making decisions, and articulating thoughts when engaging wi th people in various circumstances. 3. Strong Service Orientation. Graduates exemplify strong commitment to service excellence for the people, the clientele, industry and other sectors 4. Adept and Responsible Use or Development of Technology . Graduates demonstrate optimized and responsible use of state - of - the art technologies of their profession. They possess digital learning abilities, including technical, numerical, and/or technopreneurial skills. 5. Passion for Lifelong Learning. Graduates perform and function in the society by taking responsibility in their quest for further improvement through lifelong learning. 6. Leadership and Organizational Skills. Graduates assume leadership roles and become leading professionals in their respective disciplines by equipping them with appropriate organizational skills. 7. Personal and Professional Ethics. Graduates manifest integrity and adherence to moral and ethical principles in their personal and professional circumstances. 7 8. Resilience and Agility . Graduates demonstrate flexibility and the growth mindset to adapt and thrive in the volatile, uncertain, complex and ambiguous (VUCA) environment. 9. National and Global Responsiveness. Graduates exhibit a deep sense of nationalism as it complements the need to live as part of the global community where diversity is respected. They promote and fulfill various advocacies for human and social development. PROGRAM LEARNING OUTCOMES (PLOS) 1. Select appropriate financial decision - making tools and techniques to critically, creatively and analytically solve problems and drive results. 2. Apply digital proficiency in analyzing financial data to effectively communicate information to stakeholders for decision making. 3. Engage in lifelong learning to be adaptive and responsive to fast and disruptive changes in domestic and global financial landscape. 4. Apply ethical practices in delivering value - driven financial services responsive to the diversified needs of domestic and global community. 5. Demonstrate interpersonal, team and leadership skills necessary to promote organizational effectiveness. COURSE LEARNING OUTCOMES (CLOS) At the end of the course, the learner should be able to: 1. Apply basic financial concepts and analytical techniques and their application to international transactions 2. Explain the process and techniques used to make international investment decisions 3. Relate the effects of financial markets and trade balances on international trade and international trade 8 4. Demonstrate an understanding of the various factors that influence the international flow of funds, thereby impacting a nation’s balance of payment and its various components. 5. Demonstrate an understanding of how the international financial markets work and how Preface In an increasingly interconnected world, global finance plays a pivotal role in shaping economies, businesses, and everyday lives. This field encompasses the flow of capital, investment strategies, and financial systems that transcend national boundaries. Understanding global finance is essential for navigating the complexities of international markets, economic policies, and financial regulations. As global economic dynamics evolve, insights into financial markets, risk management, and cross - border transac tions become crucial for both individuals and organizations striving for success in a globalized economy. This overview aims to provide a foundational understanding of global finance, highlighting its significance and impact on the modern world. 9 This instructional material is intended for the exclusive use of students enrolled in the course FIMA 3 71 – Behavior al Finance Lesson 1 : Introduction to Behavioral Finance Lesson 2 : Traditional Finance VS Behavio ral F inance Lesson 3 : Decision - making Errors and B iases in Behavioral Finance Lesson 4 : Behavioral Finance Biases P1 Lesson 5 : Behavioral Finance Biases P 2 Lesson 6 : Behavioral Finance Biases P 3 Lesson 8 : Behavioral Finance Biases P 5 Lesson 9 : Overcoming Behavioral Finance Issue s Lesson 10: Cas es in B e havioral Finance Lesson 11 : Behavioral Issue s in Inv esting in the Philippines Upon completion of this instructional material, the student is expected to have a clear understanding of the importance of behaviora l finance TABLE OF CONTENTS Title Page 1 The VMP GO 3 Preface 6 10 Table of Contents 7 OBE Course Syllabus 12 Lesson 1 Introduction to Behavioral Finance a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Link to Video Recording e. Activity f. R ubrics of Activity 2 3 25 26 36 36 36 Lesson 2 Traditional Finance VS Behavioral Finance a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Link to Video Recording e. Activity f. R ubrics of Activity 3 6 38 39 51 51 51 Less o n 3 Decision - making errors and biases in Behavioral Finance a. I ntroduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Link to Video Recording e. Activit y f. Rubrics of Activity 5 6 52 53 70 74 74 Lesson 4 Behavioral Finance Biases P1 a. Introduction b. Learning Objectives/Outcomes 75 75 11 c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics 76 80 80 80 Lesson 5 Behavioral Finance Biases P2 a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics 81 81 82 98 98 98 Lesson 6 Behavioral Finance Biases P 3 a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics 99 9 9 100 114 114 114 Lesson 7 Behavioral Finance Biases P 4 a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics 115 115 116 Lesson 8 Behavioral Finance Biases P 5 a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity 1 2 5 1 2 5 1 27 12 e. Link to Video Recording f. Assessment or Rubrics g. Activity Lesson 9 Overcoming Behavioral Finance Issue a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics Lesson 10 Cases in Behavioral Fin ance a. Introduction b. Learning Objectives/Outcomes c. Presentation/Discussion of the Lesson d. Activity e. Link to Video Recording f. Assessment or Rubrics 13 COURSE SYLLABU S 14 15 16 17 18 19