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∞

What Counts as an Asset: Patents, Secrets, Brands

Why would a company keep its best invention a trade secret instead of patenting it, and what makes an idea an asset at all?

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Your summary note

1. Cashflows, and the catalogue of assets
  Write the one-line definition of a cashflow, list the categories of asset from business entities to intangibles, and record Google's algorithms as a non-physical asset made concrete by patents.
2. The patent bargain: disclosure for a fixed-term monopoly
  State what the inventor must disclose, what right the government grants in return and for how long under the post-1995 US rule, and record that the patent can be bought, sold or licensed.
3. Trade secret versus patent: when secrecy works
  Record how long a trade secret's protection lasts, work through the unpatented Coca-Cola formula, and contrast it with the cholesterol drug rival labs are chasing and the investor appeal of a patent.
4. Brand recognition as a third, distinct asset
  Separate Coca-Cola's brand from its formula and record the brand as an asset in its own right, built by years of investment and distinct from both patent and trade secret.
Attempt 1 of 2