Lecture 10 - Dynamic Present Value

author: John Geanakoplos, Yale University
recorded by: Yale University
published: March 17, 2012,   recorded: October 2009,   views: 4442
released under terms of: Creative Commons Attribution No Derivatives (CC-BY-ND)
Categories

See Also:

Download Video - generic video source Download yalemecon251f09_geanakoplos_lec10_01.mp4 (Video - generic video source 794.6 MB)

Download Video Download yalemecon251f09_geanakoplos_lec10_01.flv (Video 347.8 MB)

Download Video Download yalemecon251f09_geanakoplos_lec10_01.wmv (Video 312.8 MB)

Download subtitles Download subtitles: TT/XML, RT, SRT


Help icon Streaming Video Help

Related Open Educational Resources

Related content

Report a problem or upload files

If you have found a problem with this lecture or would like to send us extra material, articles, exercises, etc., please use our ticket system to describe your request and upload the data.
Enter your e-mail into the 'Cc' field, and we will keep you updated with your request's status.
Lecture popularity: You need to login to cast your vote.
  Bibliography

Description

In this lecture we move from present values to dynamic present values. If interest rates evolve along the forward curve, then the present value of the remaining cash flows of any instrument will evolve in a predictable trajectory. The fastest way to compute these is by backward induction. Dynamic present values help us understand the returns of various trading strategies, and how marking-to-market can prevent some subtle abuses of the system. They explain how mortgages work, why they're called amortizing, and what is meant by the remaining balance. In the second half of the lecture we turn to an important application of present value thinking: an analysis of the troubles facing the Social Security system.

Link this page

Would you like to put a link to this lecture on your homepage?
Go ahead! Copy the HTML snippet !

Write your own review or comment:

make sure you have javascript enabled or clear this field: