#148 overall
Finance Theory I
MIT OpenCourseWare
3 recommenders · 3 threads · recommended in 2 years, 2020–2022 · score 2.9
MIT Sloan's graduate-level introduction to financial theory taught by Andrew Lo in Fall 2008, covering topics such as present value and discounting, options, futures, and portfolio theory. Materials are published on MIT OpenCourseWare with lecture videos on YouTube.
Commenters call it an excellent course for learning finance fundamentals and say the Fall 2008 timing makes it especially interesting.
Business, Finance & Economicsintermediatefreevideo lectures#finance theory#portfolio theory#options#futures#andrew lo#mit
Recommendations by year
20062026
1. 6-12 month emergency fund
2. Learn to Budget if you don’t already
3. Max out retirement accounts
4. Place remainder in index funds; S&P is a great one to start with
5. Invest some time into learning more about finance
- I highly recommend the 2008 MIT open course by Andrew Lo [0] to learn some fundamentals; options, futures, portfolio theory
6. Learn some tax basics such as:
- Cost basis
- Capital gains/loss
- Capital Loss write off
- Capital loss carry forward
- Tax Loss harvesting
7. Consider looking into bitcoin
- Read The bitcoin standard and the Fiat Standard
8. Use your learnings to further optimize your investments
[0] - https://youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7...
Finance Theory I by Prof. Andrew Lo: https://ocw.mit.edu/courses/sloan-school-of-management/15-40.... You can view the first lecture here: https://www.youtube.com/watch?v=HdHlfiOAJyE&list=PLUl4u3cNGP....
Prof. Lo taught this course at MIT in the Fall of 2008, which you can imagine would be a very interesting time to teach finance. The course is excellent. I think you'll really enjoy it.
The TLDR for how a bond that continues to pay interest forever can be valued at less than infinity dollars is due to the "time value of money", which states that $X in the future is worth less than $X today. This makes sense intuitively if you consider that if you had that money today, you could invest it and earn interest on it.
So since money in your hands is worth more than that same amount of money in the future, you can actually calculate how much a future cash flow is worth today by discounting it to its present value ("discounted cash flow" aka DCF).
To bring it back to perpetual bonds, if you DCF all of the future cash flows to their present value, you actually get a finite number (due to the diminishing nature of the cash flows that are further and further in the future).
For those who want to learn this in more detail, I recommend MIT's OCW course "Finance Theory I" with Andrew Lo.