This paper advocates a theory of expectation formation that incorporates many of the central motivations of behavioral finance theory while retaining much of the discipline of the rational expectations approach. We provide a framework in which agents, in an asset pricing model, underparameterize their forecasting model in a spirit similar to Hong, Stein, and Yu (2005) and Barberis, Shleifer, an...

We develop a representative agent general equilibrium model with return extrapolation and recursive preferences. Our model is the first return extrapolation model that can be taken to the data in a serious way; it allows for detailed model calibration and direct comparisons with the leading rational expectations models of the stock market. The model matches investors’ extrapolative expectations...

This study aims to determine the effect of Current Ratio, Debt Equity and Return On Assets on Stock Returns in telecommunication services sub-sector companies listed Indonesia Exchange 2017-2021. research method is descriptive quantitative. data source uses secondary form financial statements from each telecommunications The used this multiple linear regression using EVIEWS 9 application. resul...

Capital Asset Pricing Model (CAPM) provides an equilibrium linear relationship between expected return and risk of an asset. The purpose of this paper is to investigate a risk-return relationship within the CAPM framework. The study also aims at exploring whether CAPM is a good indicator of asset pricing in Bangladesh. For this study, a period 19992003 have been considered. Fama-French [1992] m...