Why Finance?
Summary
This lecture gives a brief history of the young field of financial theory.
It shows the multiple factors which played a part in the financial crisis of 2007-09. It explains how some people were able to predict that there would be a crisis. By describing what the housing market collapse in 2006 and 2007 had to do with the crisis you could start to see how a lot of factors influence other factors.
Next, it describes the kinds of questions standard financial theories answer and explains how they work. It also introduces the leverage cycle as a critique of standard financial theory and as an explanation of the crisis.
It goes on discussing the reasons you could study finance. It gave the example of questions directors may ask when a company is in crisis. And that when you have studied finance you will be able to give a calculated and well substantiate answer.
The lecture ends with a class experiment illustrating a situation in which the efficient market hypothesis works surprisingly well.
Why is this relevant?
This lecture was relevant because it gave me a more expanded knowledge of the economic crisis and which factors played a role. I don’t think that the lecture had any direct relevance to my study, but I am convinced that more expanded knowledge of the world around you and everything that is happing benefits you in your life and business choices.
For example, when you are working in an organization that has been affected by the economic crisis, it will help you understand certain decisions that have been made. And you can make a more envisaged decision.













