In this lecture, Professor Shiller introduces mean-variance portfolio analysis, as originally outlined by Harry Markowitz, and the capital asset pricing model (CAPM) that has been the cornerstone of modern financial theory. Professor Shiller commences with the history of the first publicly traded company, the United East India Company, founded in 1602. Incorporating also the more recent history of stock markets all over the world, he elaborates on the puzzling size of the equity premium and the very high historical return of stock market investments.

In the beginning of the lecture, Professor Shiller reviews the probability theory concepts from the last class and extends these concepts by the central limit theorem. Afterwards, he turns his attention toward the role of financial technology and financial invention within society, in particular with regard to the management of big and important risks.

Professor Shiller introduces basic concepts from probability theory and embeds these concepts into the concrete context of financial crises, with examples from the financial crisis from 2007-2008. Subsequent to a historical narrative of the financial crisis from 2007-2008, he turns to the definition of the expected value and the variance of a random variable, as well as the covariance and the correlation of two random variables.

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." Finance, in his view, is a pillar of civilized society, dealing with the allocation of resources through space and time in order to manage big and important risks. After talking about finance as an occupation, he emphasizes the moral imperative to use wealth for the purposes of philanthropy, in the spirit of Andrew Carnegie, but also of Bill Gates and Warren Buffett.

In this lecture, two final books of the Bible are examined and their attitudes towards foreign nations compared. In contrast to Daniel's reliance on divine intervention to punish the wicked, the book of Esther focuses on human initiative in defeating the enemies of Israel. Finally, the book of Jonah--in which the wicked Assyrians repent and are spared divine punishment--expresses the view that God is compassionate and concerned with all creation. Professor Hayes concludes the course with remarks regarding the dynamic and complex messages presented in the Hebrew Bible.

The Book of Ruth, in which a foreign woman enters the community of Israel and becomes great-grandmother to none other than King David, expresses a view of gentiles entirely opposed to that of Ezra and Nehemiah. Other prophets of the Restoration period are discussed, including Third Isaiah who also envisions other nations joining Israel in the worship of Yahweh. This period also sees the rise of apocalyptic literature in works like Zechariah, Joel and Daniel. Written during a period of persecution in the 2nd c.

This lecture continues the discussion of the psalms, and the genres and forms in which they appear, such as psalms of praise and thanksgiving, divine kingship, lament and petition, blessing and cursing, or wisdom. Another poetic book of the Bible is the Song of Songs, an erotic work the sexually explicit content of which has been piously reinterpreted over the centuries. The second half of the lecture turns to the period of the Restoration when the Judean exiles returned to what was now the province of Yehud under Cyrus, the Persian ruler.

After a detailed explanation of the requirements for the paper assignment, Professor Hayes turns to the Writings - the third section of the Bible - and considers a recent approach to the study of the Bible, called canonical criticism. The books in this section of the Bible explore various questions associated with suffering and evil. An example is the book of Ecclesiastes which constitutes a second attack on the optimism and piety of conventional religious thinking. The lecture concludes with a discussion of a number of Psalms, their genre, purpose, and language.

This lecture begins with the Book of Lamentations, a short book of dirges that laments the destruction of Jerusalem and moves on to introduce the third and final section of the Hebrew Bible - the Ketuvim, or "Writings." This section of the Bible contains three books that exemplify the ancient Near Eastern literary genre of "Wisdom" -- Proverbs, Job and Ecclesiastes. Proverbs reinforces the Deuteronomistic idea of divine retributive justice according to which the good prosper and the evil are punished. The conventional assumption of a moral world order is attacked in the Book of Job.

The destruction of Jerusalem challenged the faith of the nation. What was the meaning of this event and how could such tremendous evil and suffering be reconciled with the nature of God himself? Professor Hayes shows how Israel's prophets attempted to answer this question, turning the nation's defeat and despair into an occasion for renewing faith in Israel's God. The lecture continues with an in-depth study of the book of Ezekiel. Ezekiel's denunciations of Jerusalem are among the most lurid and violent in the Bible and he concludes that destruction is the only possible remedy.