We use unique data fromfinancial advisers' professional exam scores and combine it with other variables to create an index of financial sophistication. Using this index to explain long-term stock return expectations, we find that more sophisticated financial advisers tend to have lower return...

This paper questions traditional approaches for testing the day-of-the-week effect on stock returns. We propose an alternative approach based on the closure test principle introduced by Marcus, Peritz and Gabriel (1976), which has become very popular in Biometrics and Medical Statistics. We test...

We match administrative panel data on portfolio choices with survey measures of financial literacy. We observe that, controlling for portfolio risk, most literate households experience 0.4% higher annual returns than least literate households. We then show that more literate households display...