Introduction to Financial Theory - Why Study Finance?

Explore the foundations of financial theory in this 1-hour 14-minute lecture from Yale University's Financial Theory course. Delve into the brief history of this young field, its origins in business schools, and its separation from economics. Examine the efficient markets hypothesis, a cornerstone of standard financial theory, and its limitations exposed by the 2007-09 financial crisis. Discover the strengths of standard financial theory and its ability to answer specific questions. Learn about the leverage cycle as a critique of standard theory and its role in explaining the crisis. Participate in a class experiment demonstrating the surprising effectiveness of the efficient markets hypothesis in certain situations. The lecture covers course introduction, collateral in standard theory, leverage in housing prices, finance examples, reasons to study finance, course logistics, and a financial market experiment.

- Chapter 1. Course Introduction.
- Chapter 2. Collateral in the Standard Theory.
- Chapter 3. Leverage in Housing Prices.
- Chapter 4. Examples of Finance.
- Chapter 5. Why Study Finance?.
- Chapter 6. Logistics.
- Chapter 7. A Experiment of the Financial Market.