Lecture Details :
Financial Theory (ECON 251)
In the first part of the lecture we wrap up the previous discussion of implied default probabilities, showing how to calculate them quickly by using the same duality trick we used to compute forward interest rates, and showing how to interpret them as spreads in the forward rates. The main part of the lecture focuses on the powerful tool of backward induction, once used in the early 1900s by the mathematician Zermelo to prove the existence of an optimal strategy in chess. We explore its application in a series of optimal stopping problems, starting with examples quite distant from economics such as how to decide when it is time to stop dating and get married. In each case we find that the option to continue is surprisingly valuable.
Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses
This course was recorded in Fall 2009.
Course Description :
This course attempts to explain the role and the importance of the financial system in the global economy. Rather than separating off the financial world from the rest of the economy, financial equilibrium is studied as an extension of economic equilibrium. The course also gives a picture of the kind of thinking and analysis done by hedge funds.
Other Resources :
Other Economics Courses
- Finance by Khan Academy
- Energy and Resources Group 280, 001 by UC Berkeley
- Introductory Game Theory 2007 by University of Canterbury
- Intermediate Macroeconomic Theory by UC Berkeley
- Psychology and Economics,Fall 2011 by UC Berkeley
- ECON 100C - Microeconomics C (B00) by UC San Diego
- Environmental Economics and Policy,Fall 2011 by UC Berkeley
- Financial Markets by Yale
- Introduction to Environmental Economics and Policy,Fall 2011 by UC Berkeley
- ECON 113 - Mathematical Economics by UC San Diego
» check out the complete list of Economics lectures