Prospect theory

Equity premium puzzle

The equity premium puzzle refers to the inability of an important class of economic models to explain the average equity risk premium (ERP) provided by a diversified portfolio of U.S. equities over that of U.S. Treasury Bills, which has been observed for more than 100 years. There is significant disparity between returns produced by stocks compared to returns produced by government treasury bills. The equity premium puzzle addresses the difficulty in understanding and explaining this disparity. This disparity is calculated using the equity risk premium: The equity risk premium is equal to the difference between equity returns and returns from government bonds. It is equal to around 5% to 8% in the United States. The risk premium represents the compensation awarded to the equity holder for taking on a higher risk by investing in equities rather than government bonds. However, the 5% to 8% premium is considered to be an implausibly high difference and the equity premium puzzle refers to the unexplained reasons driving this disparity. (Wikipedia).

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What are Structured Products? (Part 2) CPPI Constant Proportion Portfolio Insurance

In Part two of our series on Structured Products, let's learn about Constant Proportion Portfolio Insurance. These classes are all based on the book Trading and Pricing Financial Derivatives, available on Amazon at this link. https://amzn.to/2WIoAL0 Check out our website http://www.onfin

From playlist Exotic Options & Structured Products

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What are Dividend Swaps, commodity swaps, equity swaps?

In todays video we will learn about Dividend Swaps, Commodity Swaps and Equity Swaps. These classes are all based on the book Trading and Pricing Financial Derivatives, available on Amazon at this link. https://amzn.to/2WIoAL0 Check out our website http://www.onfinance.org/ Follow Patri

From playlist Swaps

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10. Debt Markets: Term Structure

Financial Markets (ECON 252) The markets for debt, both public and private far exceed the entire stock market in value and importance. The U.S. Treasury issues debt of various maturities through auctions, which are open only to authorized buyers. Corporations issue debt with investment

From playlist Financial Markets (2008) with Robert Shiller

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Investing In Mutual Funds

This video explains the math behind investing in mutual funds. It discusses the value of a mutual fund's annual performance and the value of investing long term. A equity mutual fund is a financial vehicle that invests in a variety of stocks. Thus a mutual fund is a passive way for an i

From playlist Stocks and Bonds

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The Formulas behind Savings, Investing, and Annuities

►Play around with the ANNUITY CALCULATOR I built using Maple Learn here: https://learn.maplesoft.com/index.html#/?d=PGALNIDQLNAMKQPJPUFSDSLOIOJPHNMIBUFMFFGKENLUOUGQASERIIJQPKEKJHEQGFOLNMBTDUFSBSOGHJJGNIIPPTBRBKMLFKEJ ►Check out MAPLE CALCULATOR phone app : https://www.maplesoft.com/product

From playlist Money Math

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What Are Financial Derivatives?

What Are Financial Derivatives? A Video Explaining what financial derivatives are, who trades them and why? Follow along using the book https://amzn.to/2WIoAL0 Check out our website http://www.onfinance.org/ In this video we will learn who issues derivatives, are they a zero sum game a

From playlist Class 1 Futures & Forwards

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Personal Finance - Assets, Liabilities, & Equity

This video explains what it means to have equity in your home. Equity is the difference between assets and liabilities. My Website: https://www.video-tutor.net Patreon Donations: https://www.patreon.com/MathScienceTutor Amazon Store: https://www.amazon.com/shop/theorganicchemistrytuto

From playlist Stocks and Bonds

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4. Portfolio Diversification and Supporting Financial Institutions

Financial Markets (2011) (ECON 252) 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

From playlist Financial Markets (2011) with Robert Shiller

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What are index options? What are currency options?

In todays video we will learn about options on foreign exchange and index options. These classes are all based on the book Trading and Pricing Financial Derivatives, available on Amazon at this link. https://amzn.to/2WIoAL0 Check out our website http://www.onfinance.org/ Follow Patrick

From playlist Class 5 - Options Wrap Up

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5. Insurance: The Archetypal Risk Management Institution

Financial Markets (ECON 252) Insurance provides significant risk management to a broad public, and is an essential tool for promoting human welfare. By pooling large numbers of independent or low-correlated risks, insurance providers can minimize overall risk. The risk management is tai

From playlist Financial Markets (2008) with Robert Shiller

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Financial Options Pricing History. How do Investors Price Options?

Financial Options Pricing History. Today we will learn How do Investors Price Options? These classes are all based on the book Trading and Pricing Financial Derivatives, available on Amazon at this link. https://amzn.to/2WIoAL0 Check out our website http://www.onfinance.org/ Follow Patri

From playlist Class 2: An Introduction to Options

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Ses 13: Risk and Return II & Portfolio Theory I

MIT 15.401 Finance Theory I, Fall 2008 View the complete course: http://ocw.mit.edu/15-401F08 Instructor: Andrew Lo License: Creative Commons BY-NC-SA More information at http://ocw.mit.edu/terms More courses at http://ocw.mit.edu

From playlist MIT 15.401 Finance Theory I, Fall 2008

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Preflop Analysis

MIT 15.S50 Poker Theory and Analysis, IAP 2015 View the complete course: http://ocw.mit.edu/15-S50IAP15 Instructor: Kevin Desmond This lecture focuses on how to play the pre-flop as close to optimally as possible by analyzing several scenarios. License: Creative Commons BY-NC-SA More inf

From playlist MIT 15.S50 Poker Theory and Analysis, IAP 2015

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RAPMs: Treynor, Jensen's, Sharpe (FRM T1-10)

Risk-adjusted performance measures (RAPMs) include Treynor and Jensen's, both of which are functions of the CAPM/SML, and the Sharpe ratio, which can be understood in the context of the CML. [Here is my the spreadsheet I used for this video, please let me know if you have any questions htt

From playlist Risk Foundations (FRM Topic 1)

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Investing In An Inflationary Environment!

Inflation has turned from transitory to pernicious, with some economists even raising the specter of a 1970s-style wage-price spiral. Should you reposition your investment portfolio for an inflationary environment, shifting some of your money to sectors or asset classes that tend to do wel

From playlist What is Happening In The Market?

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FRM: Weighted average cost of capital (WACC)

WACC is a marginal cost: we can't go to full leverage because the "cost of financial distress" increases the costs of financing. For more financial risk videos, visit our website! http://www.bionicturtle.com

From playlist CFA: Financial Reporting & Analysis (L1 , V3)

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Using Directional Bit Sequences to Reveal the Property-Liability Underwriting Cycle

For the latest information, please visit: http://www.wolfram.com Speaker: Joseph Haley Wolfram developers and colleagues discussed the latest in innovative technologies for cloud computing, interactive deployment, mobile devices, and more.

From playlist Wolfram Technology Conference 2016

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INTEREST: Simple Interest vs Compound Interest vs Continuous Interest

►Play around with the INTEREST CALCULATOR I built using Maple Learn for simple interest, compounded interest, and continuously compounded interest here: https://learn.maplesoft.com/index.html#/?d=PGALNIDQLNAMKQPJPUFSDSLOIOJPHNMIBUFMFFGKENLUOUGQASERIIJQPKEKJHEQGFOLNMBTDUFSBSOGHJJGNIIPPTBRBK

From playlist Money Math

Related pages

Selection bias | Survivorship bias | Capital asset pricing model | Prospect theory | Arrow–Debreu model | Adverse selection | Info-gap decision theory | Implied volatility | Financial economics | Lagrange multiplier | Satisficing | Moral hazard | VIX | Rational pricing | Risk aversion | Loss aversion | Ellsberg paradox