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∞

Moral Hazard and Contagion: Where Bailouts Stop

Why does the forest-fire firewall analogy break down the moment you try to apply it to a financial panic?

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Your summary note

1. The rescue trade-off and the firewall analogy
  Set the cost and moral hazard of rescuing large institutions, the implicit promise to future equity holders, against contagion, then record the controlled-burn firewall analogy and the visibility limit that breaks it.
2. More large failures weighed against a mass panic
  State the view that one or two further failures are needed, set it against a panic that cannot be stopped once started, and note the line-drawing argument raised by the Bear Stearns rescue.
3. Southeast Asia 1997 versus the Latin American crisis
  Record the two opposite decisions and their outcomes, then split the question into its economic side and its political and social side before weighing them against each other.
Attempt 1 of 2