Ses 1: Introduction and Course Overview

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

[@TheRandomVideoFactory]

2024 viewers where you at? 😅

[@aN0nyMas]

present! did you manage to get through it? any reviews?

[@alfonsoramirezherrera4553]

Ive watched this finance lecture like 3 times, not because i dont undertant it, just because i love the way this man teaches. This might be thes best finance course on entire internet.

[@spockchan2950]

Here ❤

[@damionfeistel6284]

Reporting in! Time to start learning about Finance :)

[@OkSid300]

Here. I hope it will help me to get rich.

[@spitimouvids6427]

2008... What a wild time to be teaching this

[@suiwing422]

hahahaha

[@MatyGti12]

2020... What a wild time to be watching this

[@codesniffer588]

@@MatyGti12 True

[@spitimouvids6427]

Matias Bravo you got me there

[@ramlalravindra1289]

@@MatyGti12 your comment is ao underrated

[@okaytokay]

I kinda regret not taking any finance courses during my uni but it's a blessing to have these high quality lectures for free.

[@rishi2364]

Absolutely, this is what the internet was supposed to be

[@TheViettan28]

I hope Tiktok does more of these for the kids.

[@WituVerdadero]

​@@rishi2364 FAX

[@DefenderMode]

Shall we study this course together? So we can discuss with each other?

[@muditchaturvedi5276]

@@TheViettan28 Forget TikTok it mainly focuses on short learning styles which isn't durable, YT and Coursera or some university websites does a great job at it !

[@MrSupernova111]

Wow, I'm half way through my junior year and I have NEVER had a professor so passionate, articulate, and outright challenge his students to grade him. I think I will listen to his lectures through the remainder of my time pursuing an undergraduate degree in finance. Outstanding job!

[@thesaltyfrog7683]

MrSupernova111 great professor indeed

[@MrSupernova111]

Yes he is. Recently, I have been listening to lectures from Aswath Damodaran from NYU. The guys is brilliant and uses minimal PP presentations or spreadsheets to get his point across. I highly recommend him as well.

[@vaibhav.mishra_]

@@MrSupernova111 I have just started studying Finance, can you share the link of lecture you mentioned, as well as any other online resources. Thank you very much for help!

[@akshitvashishth5481]

@@vaibhav.mishra_ kzbin.info/door/LvnJL8htRR1T9cbSccaoVw

[@Bishop11111]

How did it all go?

[@drsemihkumluk]

Watched the whole semester and passed my PhD Proficiency exam. Thank you professor!

[@simonbooher9465]

How is everything 3 years later?

[@clarinetowl7554]

Semih we need an update!

[@turboleggy]

Yes 🎉

[@WituVerdadero]

Fr

[@aN0nyMas]

@@simonbooher9465 bruh just have an interview on the news, so it's going good I suppose.

[@dineshthogulua6112]

I came here to review the course after finishing all 20 lectures. I give 5/5. If you are wondering, let me tell you that it is indeed incredible value for you time if you have no introduction to finance theory. A million thanks to MIT and Professor Lo.

[@foobarmaximus3506]

Cool. Next semester, you can learn to build a toilet so you don't have to shit in your yard! Way to go, bro.

[@DipayanPyne94]

​@@foobarmaximus3506 Really ? REALLY ?? Were you drunk when while writing that s..t ?? 🤦🏽‍♂️

[@aN0nyMas]

thanks bro. I've just started this. by the way would you know where the second series finance 2 is?

[@Eganaa1]

This Professor is just outstanding, my god. I have never thought that finance lecture could be so passionate. Thank you very much for uploading such a useful video.

[@khuongho4144]

Eganaa1 I know right :)

[@samou3i15]

u encourage me to complete this course ...

[@VicTor-mk2eb]

This is mit professor , Not that agogagogo professor

[@Wayfarer17683]

Agree this guy is amazing

[@9648216]

Absolutely!!!

[@anshika7758]

Below are the timestamps: Ses 1: Introduction and Course Overview Introduction to Finance Theory 00:00 Discovering the Excitement of Finance 02:33 Key Components of the Course 04:39 Six Basic Principles of Finance 06:44 Understanding Finance: Mathematics Plus Money 08:49 James Simons: From Mathematics Professor to Hedge Fund Success 11:25 Warren Buffett: The Simplicity of Wealth 14:30 Successful Business Leaders and Finance 17:39 The Fundamental Challenges of Finance 20:51 Price Discovery Mechanism in Financial Markets 23:33 Live Auction Experiment 26:30 Competitive Bidding 28:47 Value Determination Without Information 30:22 The Challenge of Valuation 32:39 Comprehensive Scope of Finance 35:23 Accounting as the Basis of Financial Analysis 38:07 Framework for Corporate Financial Decisions 41:15 Applying Financial Concepts to Personal Management 44:18 Challenges of Time and Risk in Finance 47:04 Six Fundamental Principles of Finance 50:15 Course Overview and Structure 53:28 Importance of Active Participation in Learning Finance 56:39 Exam Structure and Problem Sets 59:31 The Practical Aspect of Finance 1:02:16 Tips for Maximizing Learning 1:04:52

[@Billionairebabi]

W

[@wentaoqiu4072]

Never have I thought a finance lecture can be this good, the auction demo is truly inspiring.

[@normanjtongmd]

Professor Lo is fantastic in his ability to present the complex material painlessly! Not only clear in his communication, but also with a sprinkling of humor.

[@HowToArtillery]

a smart person can understand and talk about complex concepts but a brilliant person can dumb them down

[@avgustinlazo4354]

I appreciate his respect for his students. He is treating them and talking to them like adults.

[@0xcc32sys_err4]

I mean they are adults lol

[@sergiodelavega5412]

They are 22-25 they are adults. Nobody thinks of them as kids

[@sergiodelavega5412]

@@Cagmito125sportsbikespares it's grad school

[@MrKnockout_]

Lol welcome to college. Sounds like you're in 10th grade

[@Abkuyper]

@@sergiodelavega5412 some professors kinda pretend they are respecting but really not.

[@johnc2421]

Andrew Lo is such a great teacher! Learning this at my 30s, only wish I had the opportunity to have this kind of lesson in my college years. And finance was never a true interest to me until now.

[@theburden9920]

it is never too late

[@yawzerdoink-a-sore-as8159]

I have been running away from finance for the sole reason of the phobia of the mathematics. That fear is the biggest hurdle for students to get over. Finance is simple once we lose the phobia of the numbers and math. I embraced finance, via crypto, and I feel like a fish in water. This is where I belong. No fear. I embrace it all. Amazing professor. You guys kick Harvard’s butt 😍

[@yawzerdoink-a-sore-as8159]

Break at 42:00

[@samueldayo9261]

This is where I belong ❤

[@cynthia-jo1zz]

Same same here!!!!

[@Omikoshi78]

As someone in a professional field for 20years; it’s been a long time since a lecture got me excited. I’m going to compete his online courses.

[@anyu8109]

Starting the course in 2020. this course is amazing! Thanks Prof. Andrew Lo.

[@Cagmito125sportsbikespares]

Lucky. How did you do?

[@karinaycb4293]

Really love how he is so passionate about finance! Passionate people are always a blast at teaching

[@kodymccollum8235]

To take bathtub analogy one step further - water level is stock price, water flowing in is revenue, but also the drain (water removed from tub) is costs.

[@charlottefitzgerald8396]

2022 and I'm finding this relevant and captivating! Great lecturer 👍

[@akshajnandigam7890]

The passion in this lecture is unbelievable i feel like he really has a unique perspective on teaching and cant wait to finish this playlist to fully understand his perspective

[@tomchen3356]

Thank you based MIT, I'm a slave programmer in the Valley and these lectures are both eye-opening and immediately applicable to a huge part of my life.

[@yangyu4489]

i was also a slave programmer till i realized i'll never learn the tools to financially liberate myself by googling bugs and writing code.. gotta move into the business/investment quadrant

[@hujake5406]

@@yangyu4489 are you guys rich yet

[@yangyu4489]

​@@hujake5406 ya in 8 months ive become a billionaire

[@hujake5406]

@@yangyu4489 it only took me a day to become millionaire.

[@dragz888]

@@hujake5406 i find both of those hard to believe lol

[@lakshmanbodepudi]

I dont think that i would ever forget that example of ipod auction and explaining value from that

[@bart9522]

48:54 "interest rates are non-negative" that did not age well

[@lassorb4752]

🙏🏼😂

[@danielarce3256]

Oil😂

[@sudhirpatil3434]

Just watch sirs body language- so much interested in teaching- he perhaps is 1 of best prof in finance fields today! Hats off-

[@veronaxu]

Honestly I noticed this course 4 years ago but never got the time to watch. Now that I got a Bachelor's degree in finance I'm back here and things make much more sense now.

[@jalapenohiway]

I really love this gentleman's enthusiasm. Great content so far. I'm very excited about this course!

[@yangyu4489]

gentlemans enthusiasm is a phenomenal pairing of words. thats a band name right there

[@yimingxu7446]

OMG THIS GUY IS AMAZING!! Finally understand why people would kill to get in a top university

[@ronaldmoirangcha638]

Thank you prof.. And MIT for making such valuable learning resource available. From Manipur, India.

[@travellerboy6999]

The way he teaches the concepts is really extraordinary...and i found this video of him very .... valuable for me Thankyou professor

[@TheChartFather]

Great lecture. I miss being in an environment where those involved are motivated and engaged voluntarily. Hard to find in the real world.

[@ВПоискахПравды-ь6э]

Yeah man. I thought I'm going crazy, but then I accepted it. Just trying to stay cool ))

[@arrowb3408]

Prof Lo' s teaching method in business is well prepared in full scope from history to the modern practical financial industry. Plus spice up some little small business game. That's so fascinating to listen his well round teaching.......STF......

[@haipingwang7075]

Very amazed by the presentation of an introduction, I fell in love with this class already. Thanks for uploading it.

[@rosenskietolentino8420]

Being someone that has not experienced college, This kind of teaching really make me wonder the things I missed out on

[@internz4259]

It's never to late

[@rickhammond2473]

You did not miss anything the smarter people become the dumber they become.I have no colledge and making massive coin on Tesla long since 2019 and CRGE in which I got in under a 1.00.The people like Buffet have no common sense.I live in a wealthy are and the people are stupid do not know how to drive the kids are screwed up it is ashame what happen to the society.Uneducated are dumb and the educated are really dumb.

[@valoxsen6003]

Wow... fall 2008 I was starting my major in journalism. Now here I am, 16 years later, wanting to make a career change into finance 🥺It's somehow fitting that I found this lecture series that was recorded when I myself was in college!

[@CNASIR-tt5oc]

I’m in love 😍 with this teacher and this class. I’m Definitely finishing this course and learning about finance

[@bautistabaiocchi-lora1339]

years later and i am back again to see this beauty of a class.

[@IrfanKhan-yg8zu]

really impressed, professor, i am watching after completing my PhD, from the very beginning, and behaving like i am new in finance lol

[@skbskb7596]

Excellent teaching, I can not afford MIT tuition (at this age going back to school is also tough), and it's a blessing

[@Onomandah]

This was a great watch! Such an exciting and fun lecture! Looking forward to finishing the rest of the lectures!

[@sudhirpatil3434]

I haven't listened to better information put up in most precise manner than this prof- he is a jem of a person!

[@robertovalle655]

who else is binge watching this in 2020? LOL

[@mikspanks]

I am watching in 2021

[@Linguages2024]

@@mikspanks Me too

[@thisisTrev]

Lol yep

[@anonym4707]

i liked, then i realised its 2021

[@justwatchinvideos305]

Let’s go baby!

[@ares2925]

For someone late to learning subjects to help with securing safety for my future. Having this, will REALLY help gain some knowledge and hopefully be able to apply it. Massive respect to the OpenCourseWare team.

[@mexicanboss5823]

I have NO idea how I ended up on this video but it had me very entertained. Great teacher!

[@FrenchMontreville]

This is a beautiful open statement and I'm hooked with just your introduction...

[@diegoandres9065]

August 2023. Learning business english and finance at the same time with MIT, thank you professor for this masterpiece.

[@jamesmatthew1903]

I didn't go to MIT but he's right when he says it will take years to appreciate the knowledge you gain.

[@josecurto6352]

Thanks MIT. Following from Sweden.

[@mincoffee1995]

his accent is so comfortable and easy to understand.

[@samueldayo9261]

So lovely, i was so happy watching him teach through the video and full course. A good vibe. I'm here 2023,

[@jasonbourne3569]

This is my girl friend's brother's laptop.God save me from poverty.

[@wcatcher5622]

Better start learning and working and stop praying

[@honest_bishop5905]

@@wcatcher5622 What do you do, you condescending little shit

[@jacquir8331]

@@honest_bishop5905 honey it's called life. Stroll off of MIT campus a few blocks away into low income housing projects. Take a look around at the poverty, the ignorance, the crime, drugs, and the gangs.

[@HighOnTheSound]

Just starting this course now, 14 years later.

[@shahoriyerhossain5867]

Thank u so much MIT for uploading outstanding lecture.

[@patrickblair2818]

It's a double entendre because the apple Ipod sells because of Apples brand presence.

[@bookgains]

For a curious person, this channel is a gold.

[@olgapashkova6791]

What an absolutely wonderful set of lectures!

[@nancysmith9487]

Appreciate the opportunity to share lecture. Definitely getting some ice cream. Like that food group

[@blackflagbarbering4753]

Watching this in 2022 as a 29 year old, broke, VCAL education and with no background in finance what so ever.

[@michaelanthonygutierrez]

Gods peace will protect you, from phillipians

[@rachittripathi9424]

+MIT OpenCourseWare can you please post the problem banks of this course

[@dany2685]

Hello! The reason I am coming to watch your videos is I want to do some automation solving problems and creating a site that will make the financial more easy to use to the normal humans. I do have a bachelor degree of finance and economic informatics (a combination between computer programming and finance) but it is always good to see different points of view and to have a deep dive in finance.

[@dhruvjoshi4524]

Loved how the camera captures the water bottle when the professor says: "Water is valuable" 24:45

[@张小贤-t8g]

following from China ,Thanks

[@raj8294]

Wish I watched this during undergrad. Brilliant professor

[@RocksmithPdl]

Fun fact: This lecture was done around the 2008-09 financial crisis

[@omardkair4843]

following from Morocco , Agadir , :)

[@jorgefelix406]

Just stumbled upon this on TikTok, I’m hoping to learn a lot from this!!

[@joseramirez3316]

Idiot

[@tommylee3740]

Who is watching this is 2021? It hit me when the bidding item was an iPod nano 😂😂😂. Use to cost $149!

[@srinivasansai2698]

Haha

[@SuperCHIBOT]

Prof.Lo is the director of the MIT Laboratory in Financial Engineering. The Title combining MIT gives some touch, I guess.

[@ashanair440]

Just one word for this lecture: Wow! I'm gonna complete the course..:)

[@ivogeorgiev2733]

Does anyone know which edition of the textbook is this?

[@mitocw]

Brealey, Richard, Stewart Myers, and Franklin Allen. Principles of Corporate Finance. 9th ed. New York, NY: McGraw Hill, 2007. ISBN: 9780071266758. See the course materials for more info at: ocw.mit.edu/15-401F08. Best wishes on your studies!

[@duchuymai4743]

Thank you very much ! MIT

[@hanzlee5173]

best finance course I’ve found on KZbin!

[@bryanmarin955]

Has anyone been able to find the reading packets online? I can't seem to find them anywhere whatsoever.

[@mitocw]

+Bryan Marin There are lecture slides available for the course on MIT OpenCourseWare in the "Video Lectures and Slides" section. See ocw.mit.edu/15-401F08 for details. Hopefully these will help you.

[@adhura_sahitya]

Tq MIT for enriching us 🌼🌼 I m from political science background but this year I m taking admission in MBA in a college in India.

[@adhura_sahitya]

It's 21 May 2020

[@johnyf.q.8043]

Regarding the Mother Theresa comment, a clarification: Just like a parents' utility is raised through the offspring's effective and expected utilities (in the parent's valuation scale), so was Mother Theresas's through others. Economists, at least real ones (Unfortunatelly MIT never had any) are quite right.

[@beemercycle]

True, but utilities and selfishness are not the same thing. Mother Theresa raised her utilities by being un-selfish because she wanted to see other people's self interest put before her own.

[@alharosh]

Honest i never like finance but now i really like it, and I am planing to go through all the course. Thanks

[@DewTime]

A Alharosh how many lectures did you watch

[@atri-us]

Does he pronounce "finance" unusually or is it me?

[@Melissameii]

Only when I watched this video did I realise my professors aren’t passionate at all in their teaching! This made me want to absorb the information he was giving us vs in my lectures it felt like a chore.

[@Melissameii]

To be fair I had one lecturer out of 4 that was passionate

[@srinivasansai2698]

Perfect

[@Amansingh-vg4nn]

This prof is lit man....I like his grading idea though 😀

[@taylor_o]

this guy is a great speaker

[@patrickblair2818]

That's reputation... The sixth pillar of finance. Why did the pricing of the Ipod go the way that it did during the auction? Your reputation.

[@joannemeeks745]

Outstanding. A great basic primer for those deciding what crypto to invest in here in 2022!

[@urfav1161]

man it is so weird hearing him say finance but he says it like “fa nance” i’m so used to hearing “fi nance”

[@SheDayTrades]

Glad you noticed it. I was cringing every time he said it.

[@ProfumoNostalgico]

Their service are good, always on time and top notch service

[@aq8211]

Who else is watching in 2023 ❤

[@DefenderMode]

Me😂😂😂

[@jasonasoriano]

Wonder where all of these students are now.....

[@ChancetheCanine]

This guy was teaching value before QE and stock buy backs!!!

[@ahmadshahkabeeri3893]

Thanks from your course and your good lecture I haven't ever seen such as this gentleman lectures your lectures were and are so good thanks a million that your prepared a free course for the people that they are remote from knowledge to understand about the finance and they work in third world such as me. your are very outstanding lecturer. I wish you the best standard of living your life.

[@rickhammond2473]

The sad part is the smarter the people become the dumber they become I run into them everyday bottom line they are dumb as a box of rocks I take it they read to many books.

[@nortongartino4602]

yo that professor gave a $149 Ipod for 45, that's dedication to the craft of teaching right there.

[@wilianmelendez7934]

Thank you so much professor! Very clear and straightforward easy to understand. What’s the name of the text book ?

[@maxmiliananthony6277]

did you find the name of the booK?

[@najv9482]

I really like MIT courses, l recommend to give a short quiz after for each course via google doc and then a certificate will be provided.

[@mitocw]

OCW does not offer any degree, credit, or certification. For MIT online courses with certificates of completion, visit: MITx Online/MITx on edX: openlearning.mit.edu/courses-programs/mitx-courses MITx MicroMasters: openlearning.mit.edu/courses-programs/micromasters-programs MIT xPRO: openlearning.mit.edu/courses-programs/mit-xpro MIT Bootcamps: bootcamps.mit.edu/ MIT Management / Sloan Executive Education: exec.mit.edu/s/ For questions about these programs, please contact them directly.

[@jerrykitich3318]

The other question is how liquid the market is. In other words, how many students have cash on them and what is the maximum amount of cash any one person has. Which could be enhanced if people thought of and were willing to pool their money. That was the constraint that was set. Furthered by the professor making the statement that cash is payable by the end of class, to reduce counter-party risk.

[@drainmonkeys385]

Finance is Thee most important.. because without it nothing can really be done

[@lindamadrid3108]

what a wonderful first video, thank you Mr.Lo

[@chasityj.4130]

Wonderful and passionate and skilled professor!

[@marylin5682]

I see Bitcoin eth and others going on a high soon but remember the market is yet tricky. Without the right candle sticks you may lose the market.

[@tristantierney3969]

All the ocw courses are posted well after they were filmed because they just now decided they would post them for ocw and have formatted them. The website for this one probably has notes written this year with any new information.

[@RoboBlocker]

Idk how people complain about the prices of higher education when I can literally watch MIT experts on line for free whenever I want.

[@americusduyen]

does anybody know where can I download "MIT Sloan Finance Problems and Solutions" Collection which the Professor mentioned in the lecture? Thanks

[@AlvinGuoSubscribe]

I think it's in the description

[@durgaambigaysivagurunathan7523]

Thanks to MIT OCW, its a great chance to listen to the MIT lecture from India. Want to learn and know more about Financial Management...in MIT.

[@mitocw]

Visit our site to see what we have Financial Management. Here's a link to get you started: ocw.mit.edu/courses/find-by-topic/#cat=business&subcat=finance Best wishes on your studies!

[@kiyaheza7485]

worth noting that this guy is currently a billionaire lol

[@angelbaby.7897]

Great ready to start this

[@Cheesecake99YearsAgo]

Where is finance 2 playlist ?

[@mitocw]

We have Finance Theory II available but without video: ocw.mit.edu/courses/15-402-finance-theory-ii-spring-2003/. Best wishes on your studies!