Finance Market - Lecture 3: Finance and insurance

Behavioral finance

• mixed with other subjects: psychology, sociology etc.

Subprime crisis

• mortgages
• housing market declining

Technology

• mathematic tools, financial instrument

People

• Rich: William Durr, 19th century
• Yale Professor: William Graham Sumner
• Philosopher: Peter Unger: Living high and letting die
• UNICEF: you don’t give out money does not mean you are a bad person
• Outside speakers: David Swensen (Yale, 1996-2006 average return 17% of Yale endowment), Andrew Redleaf (Yale alumni)

Outline of the course

• theories: basic concepts of risk management
• probability theory, variance, co-variance
• technology, information technology
• patent
• insurance: 17 century, probability
• portfolio diversification
• efficient market theory
• behavioral finance
• regulation
• debt markets
• stock market: MM theory
• real estate (housing market) –> subprime crisis
• banking, banking regulation
• monetary policy
• investment banking
• money manager
• brokerages
• future markets (期货市场) and forward markets
• options markets (期权市场)
• democratization of finance