Institute of Aviation Sciences

Traditionally, corporate finance theories such as the Capital Asset Pricing Model (CAPM) were used to evaluate risk and investment decisions. However, CAPM, and many of the other traditional corporate finance theories, were contested by behavioral economists who argued that the models weren’t working because people did not behave as they should! In this video, Dr Barry Oliver introduces four anomalies – the equity premium puzzle, the January effect, Winner’s curse and Momentum.