Open Yale CoursesECON 251: Financial TheoryLecture 1 - Why Finance?next session >>Overview:This lecture gives a brief history of the young field of financial theory, which began in business schools quiteseparate from economics, and of my growing interest in the field and in Wall Street. A cornerstone ofstandard financial theory is the efficient markets hypothesis, but that has been discredited by the financialcrisis of 2007-09. This lecture describes the kinds of questions standard financial theory nevertheless answerswell. It also introduces the leverage cycle as a critique of standard financial theory and as an explanation of
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