2. The Universal Principle of Risk Management: Pooling and the Hedging of Risks

Financial Markets (ECON 252)

Statistics and mathematics underlie the theories of finance. Probability Theory and various distribution types are important to understanding finance. Risk management, for instance, depends on tools such as variance, standard deviation, correlation, and regression analysis. Financial analysis methods such as present values and valuing streams of payments are fundamental to understanding the time value of money and have been in practice for centuries.

00:00 - Chapter 1. The Etymology of Probability
10:01 - Chapter 2. The Beginning of Probability Theory
15:38 - Chapter 3. Measures of Central Tendency: Independence and Geometric Average
33:12 - Chapter 4. Measures of Dispersion and Statistical Applications
50:39 - Chapter 5. Present Value
01:03:46 - Chapter 6. The Expected Utility Theory and Conclusion

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Spring 2008.

Category:

Education

Tags:

• binomial
• distribution
• central
• tendency
• correlation
• covariance
• expected
• value
• fat-tailed
• multiplication
• theory
• perpetuities
• perpetuity
• present
• values
• probability
• regression
• risk
• management
• standard
• deviation
• variance