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Popularity: A Bridge Between Classical and Behavioral Finance

byRoger G. Ibbotson,Thomas M. Idzorek,Paul D. KaplanandJames X. Xiong

Roger Ibbotson, Thomas Idzorek, Paul Kaplan, and James Xiong examine popularity as a force connecting traditional asset pricing with behavioral finance. Investors often pay more for securities that are familiar, liquid, admired, exciting, or associated with compelling stories, while neglected assets may offer higher expected returns as compensation for their disadvantages. The authors develop a framework for separating characteristics investors value from risks they must bear. By treating popularity as a broad market influence, the book explains puzzles that standard models overlook and offers practical insight into diversification, factor investing, valuation, and the behavioral sources of return.

Publisher

CFA Institute Research Foundation

Publication date

2018

Format

Print edition

Pages

—

ISBN

9781944960605