Behavioral finance is the study of human psychology as it relates to financial decision-making. Many findings from the study of behavioral finance indicate that investors do not behave rationally. Rational behavior is a key assumption of Modern Portfolio Theory (MPT) and the Efficient Market Hypothesis (EMH).
Synonym: behavioural finance
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Zoe: Should I use the American spelling of
Behavioral Finance or the British
Kay: Only 36% of Americans have passports. Know your audience. Go with behavioral.
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