Foundations of Finance

01Defining Finance and the Financial System 02Valuation and Management: The Two Challenges 03Stocks, Flows, and the Five Cash-Flow Decisions 04Time, Risk, and the Six Principles of Finance 05How to Learn Finance: Practice and Study Habits Problem set0/10 Problem set 20/10 Practice∞

Present Value

01Information and Price: An Auction and Fannie Mae 02Who Pays for the Fannie and Freddie Guarantee?03What Counts as an Asset: Patents, Secrets, Brands 04An Asset as a Sequence of Dated Cashflows 05The Value Operator and the Cashflow Timeline 06Dates as Currencies: Building Net Present Value 07Discount Factors: Market Prices for Future Dollars 08A Worked Net Present Value and Its Assumptions 09The Opportunity Cost of Capital and Present Value Problem set0/10 Problem set 20/10 MIT problem set0/5 Practice∞

01Does the Currency Change an NPV's Sign?02Moral Hazard and Contagion: Where Bailouts Stop 03The NPV Rule at Work, and Choosing the Rate 04The Perpetuity: Why Cash Forever Is Worth C/r 05Reading the Rate Off a Perpetuity's Price 06The Growing Perpetuity, and When Growth Outruns r 07Building the Annuity from Two Perpetuities 08The Annuity Discount Factor and Mortgage Payments 09APR, the Effective Annual Rate, and Compounding Problem set0/10 Problem set 20/10 MIT problem set0/13 Practice∞

Information and Price: An Auction and Fannie Mae

Why did a wrapped iPod sell for thirty cents on the dollar, and how does that explain the 2008 takeover of Fannie Mae?

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Your summary note

1. The wrapped-box auction and its reversed prices
  Record how the second package reversed the prices, the $150 iPod selling for $45 while the $45 book fetched $60, and the box size as the only signal bidders priced.
2. Fannie and Freddie as a secondary mortgage market
  Trace how selling a mortgage to Fannie or Freddie frees a bank's capital to lend again, name the other consumer loans covered, and record the housing downturn and the takeover of September 6-7, 2008.
3. Paper whose issuer, payments and survival are unknown
  Set the paper beside the wrapped iPod, write out the layered not-knowing on both sides, place its price against $0.30 on the dollar, and record what the Treasury acted to prevent.
Attempt 1 of 2