Financial Knowledge and Rationality of Canadian Investors
55 Pages Posted: 13 Apr 2012
Date Written: March 18, 2012
Investors’ financial skill rests on two elements: 1) literacy, which is the financial knowledge itself and the skill required to use the knowledge, and 2) rationality, which refers to the lack of major biases such as overconfidence. To estimate the level of investors’ knowledge and rationality, we administered an online survey to 1814 investors in Québec and Ontario who manage their own stock portfolios. Their average portfolio is valued at $200,000, mostly invested in stocks of large or small listed companies. We measured knowledge using scores and compared these scores with investors’ evaluations of their knowledge in various areas, to examine the dimension of rationality. We also tried to identify several other behavioral biases.
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