ECON 251 - Lecture 7 - Shakespeare's Merchant of Venice and Collateral, Present Value and the Vocabulary of Finance

Lecture 7 - Shakespeare's Merchant of Venice and Collateral, Present Value and the Vocabulary of Finance

Overview

While economists didn't have a good theory of interest until Irving Fisher came along, and didn't understand the role of collateral until even later, Shakespeare understood many of these things hundreds of years earlier. The first half of this lecture examines Shakespeare's economic insights in depth, and sees how they sometimes prefigured or even surpassed Irving Fisher's intuitions. The second half of this lecture uses the concept of present value to define and explain some of the basic financial instruments: coupon bonds, annuities, perpetuities, and mortgages.

Assignment

Ross, Corporate Finance, chapters 4 and 7

Sharpe, Investments, pp. 108-119

Bodie, Finance, pp. 101-142

Taggart, Quantitative Analysis for Investment Management, pp. 3-16

Course Media

Transcript

html

Audio

mp3

Low Bandwidth Video

mov [100MB]

High Bandwidth Video

mov [500MB]