Write an essay between 800 and 1200 words (excluding references), consisting of three tasks: 1. Read and summarize “Speculative Asset Prices”
2. Explain the efficient market hypothesis (EMH), behavioral finance, and their relevance in explaining asset price bubbles.
3. In the end of the article, Shiller concluded with the statement: “Changes in our financial institutions that take the form of creative reinventions in the kinds of risks traded, that change the psychological framing of the things traded, that change our social relations with business partners and adversaries, can make financial markets less vulnerable to excesses and crashes and more effective in helping us achieve our ultimate goals.” Explain how he reached this view and discuss your view on this statement.
General Guideline: The essay should start with the introduction, main body and the conclusion. Make sure that in your essay, all the three tasks are carried out.
Criteria and Marking: The total mark for this assignment is 30, which consists of the following criteria: • Article summary (4 marks) • EMH and behavioral finance (6 marks) • Discuss the author’s view (10 marks) • Writing Quality (5 marks) • Presentation (1 mark) • Reference (4 marks)
