Basic Finance Tutorials - Week 1

 

First Law of Finance

· Time has value

· Financial tools price processed time

· Every product choice = buying a different future value

Second Law – Rapid Aggregation & Allocation

· Civil‑War North won via bonds pooling funds; South printed money → hyper‑inflation

· Banks, stocks, bonds are fast pooling channels

Third Law – Shared Upside / Downside

· Insurance disperses risk across many

· VOC raised voyage funds via shares

· 2010 SpaceX massive funding sped development

· VC invests early‑stage high‑risk/high‑growth

· PE exits after value increase

Summary: Finance processes time, pools capital, shares risk

Matthew Effect

· Leverage magnifies wealth gap

Moral Hazard

· Info asymmetry + greed → unfair gains

Side Topic

· Finance only cares about the future

· Always weigh risk–return

· High‑risk VC vs low‑risk bonds