Chapter 11: Restructuring through a bankruptcy
Lets change the discount rates depending on how far out the payments are.
Using a home purchase to illustrate assets, liabilities and owner's equity.
What happens to equity when the value of the assets increase or decrease.
The math of renting vs. buying a home. Challenging the notion that it is always better to buy.
Factoring in appreciation and depreciation into the rent vs. buy decision.
Detailed analysis of the rent vs. buy decision.
Introduction to bankruptcy liquidation (Chapter 7).
Introduction to return on capital and cost of capital. Using these concepts to decide where to invest.
Compounding 100% annual interest continuously over a year converges to e (2.71...).
Continuously compounding $P in principal at an annual interest rate of r for a year ends up with a final payment of $Pe^r.
Review of balance sheets. Difference between illiquidity and insolvency.
What it means when the market value of a stock is different from its book value.
Different ways of accounting for an asset. Mark-to-model vs. mark-to-market.
How the bank can liquidate assets to pay off debt that comes due.
The bank gets bailed out by an equity infusion from a sovereign wealth fund.
What happens when there is no equity infusion and the bank goes in to bankruptcy.
How the banks are connected. What happens when one bank fails.
Why a CDO could be worth nothing even though they are "collateralized".
A real life example of a transaction involving CDOs.
A solution that is MUCH fairer that has a MUCH better chance of working!
Introduction to the income statement of a bank (and to income statements in general).
Fractional reserve banking and the multiplier effect. Introduction to the money supply.
Chapter 7 and Chapter 13 personal bankruptcy. This video was sponsored by Visa, but I had complete editorial freedom as to its contents.
Using the Rule of 72 to approximate how long it will take for an investment to double at a given interest rate.
The difference between APR and effective APR.
Why bond prices move inversely to changes in interest rate.
Introduction to traditional IRA's (Individual Retirement Accounts).
The institutions involved in processing your credit credit and how they relate to each other.