theory of finance
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Behavioral Finance is a relatively recent revolution in finance that applies insights from all of the social sciences to finance. New decision-making models incorporate psychology and sociology, among other disciplines, to explain economic and financial phenomenon, such as erratic stock price variations. Psychological patterns such as overconfidence and perceived kinks in the value function seem to impact financial decision-making, but are...more
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Statistics and mathematics underlie the theories of finance. Probability Theory and various distribution types are important to understanding finance. Risk management, for instance, depends on tools such as variance, standard deviation, correlation, and regression analysis. Financial analysis methods such as present values and valuing streams of payments are fundamental to understanding the time value of money and have been in practice for...more
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Professor Shiller provides a description of the course, Financial Markets, including administrative details and the topics to be discussed in each lecture. He briefly discusses the importance of studying finance and each key topic. Lecture topics will include: behavioral finance, financial technology, financial instruments, commercial banking, investment banking, financial markets and institutions, real estate, regulation, monetary policy,...more
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Financial Markets (2011) (ECON 252) Professor Shiller provides a description of the course, including its general theme, the relevant textbooks, as well as the interplay of his course with Professor Geanakoplos's course "Economics 251--Financial Theory."
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Several theories in finance relate to stock price analysis and prediction. The efficient markets hypothesis states that stock prices for publicly-traded companies reflect all available information. Prices adjust to new information instantaneously, so it is impossible to "beat the market." Furthermore, the random walk theory asserts that changes in stock prices arise only from unanticipated new information, and so it is impossible to predic...more
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Byers goes over the essentials of a venture finance process: angel investors, corporate venture capital, boot strapping and the public. He also discusses the pros and cons of each of these pieces in this process.
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Professor Shiller, in his final lecture, reviews some of the most important tools for individual risk management. Significant inequality in domestic and international communities has created a need for social insurance programs, such as those created in Germany in the late 1800s. The tax system, bankruptcy laws, and government insurance programs are used to manage risk of personal wealth. However, each of these inventions must take account...more
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Adams answers the question: Will someone with experience and credentials have a better chance of securing a venture finance deal than someone who is new and inexperienced? He believes that a good idea will always prevail. Other factors are important to consider, including team, but the right idea presented to the right VC will win.
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MissionPoint Capital Partners co-founder Jesse Fink explains what it means to merge clean energy and environmental finance, including cap and trade and other infrastructure supports, that helps bring clean tech initiatives to market faster and at a lower cost.
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While entrepreneur and former Lotus 1-2-3 founder Mitch Kapor understands how selling finance can boost a burgeoning enterprise, his experience has also acquainted him with some of the disadvantages - mainly accountability and a forced schedule of progress. Here, Kapor outlines some of the many alternatives to the traditional VC paradigm, including self-financing and angel funding.
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The stock market is the information center for the corporate sector. It represents individuals' ownership in publicly-held corporations. Although corporations have a variety of stakeholders, the shareholders of a for-profit corporation are central since the company is ultimately responsible to them. Companies offer dividends, stock repurchases and stock dividends to give profits back to shareholders or to signal information. Companies can ...more
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Carl Icahn, a prominent activist investor in corporate America, talks about his career and how he became interested in finance and involved in shareholder activism. He discusses his thoughts about today's economy and American businesses and their inherent threats and opportunities. He believes that the biggest challenge facing corporate America is weak management and that today's CEOs, with exceptions, might not be the most capable of lead...more
