Do These Differences Matter?

A good financial system appears to accelerate economic growth.[1] In fact, at least rudimen­tary finance may be necessary for any growth at all. Raghu Rajan and Luigi Zingales give the example of a bamboo-stool maker in Bangladesh, who needed 22 cents to buy the raw materials for each stool. Unfortunately, she did not have

What We Do Know: The Seven Most Important Ideas in Finance

What would you say if you were asked to name the seven most important ideas in finance? Here is our list. 1. Net Present Value When you wish to know the value of a used car, you look at prices in the secondhand car market. Similarly, when you wish to know the value of

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What We Do Not Know: 10 Unsolved Problems in Finance

Since the unknown is never exhausted, the list of what we do not know about finance could go on forever. But, following Brealey, Myers, and Allen’s Third Law (see Section 29-5), we list and briefly discuss 10 unsolved problems that seem ripe for productive research. 1. What Determines Project Risk and Present Value? A

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