🙋 Student Q&A (Lecture 2)

Click here to learn about timestamps and my process for answering questions. Section agendas can be found here. Email office hour questions to rob.mgmte2000@gmail.com. PS1Q2=“Question 2 of Problem Set 1”

📅 No Section on Saturday, Feb 7

No section today. For more information, see the announcement on Canvas.

📅 Questions covered Tuesday, Feb 10

🕣 7:50pm
❔ when we talk about CHP does that refer to actual deposits/withdrawls?

✔ It refers to, at any given moment, the actual number of dollars that everybody in the country has in their checking and savings deposits. So it’s not about money coming in or out of the account, it’s about how much money is in the account at that moment.

🕣 8:06
❔ from first live class: is there a difference between retained earnings and retained profits or is that used interchangeably

✔ Same

🕣 8:08ish
❔ can you dive deeper into the differences between the civil law system and the common law systems?whats the biggest differences

✔ civil law is written by central governments. common law is written in a less centralized manner - by judges.

🕣 8:16pm
❔ Could we please have some examples of the liabilities people are susceptible to in common law financial markets?

✔ Historically, investing in financial markets has been a danger from being swindled. And according to the theory that was described, that we were discussing back there, common law systems have done a good job of preventing people from being swindled in financial markets. If you want to get an idea of how you might be swindled in the financial market, The Wolf of Wall Street is based on a true story and will tell you about kind of pump and dump penny stocks. So if you get an email saying buy this stock, put them in the spam folder.

🕣 8:13pm
❔ from the first recorded lecture: how does the banking system in china work? is there a fed? if so, why is the govt manging their banking instead of the fed? whats the role of their fed

✔ There is a central bank of China, the People’s Bank of China, and they are in general in China is much more government control of all aspects of the economy. There’s much more central planning, and a number of firms have very significant ownership shares controlling ownership shares by the central government, so it can affect many aspects of the economy, including many aspects of the financial system. But they still do have a central bank, much like we have a central bank.

🕣 8:14pm
❔ how in depth do we need to know the charts about banking distribution?

✔ You don’t need to memorize little details like that.

1. It’s an open book exam
2. He’s much more interested in big picture than he is in facts and figures

He’s not really ever going to test you on memorization. I think in the Futures lecture, it’s helpful to remember the contract size for one specific contract or two specific contracts. Just think of maybe a couple other numbers, but that’s it.

🕣 8:16pm
❔ 🙋 With regards to banks i think the different banking styles also influences approaches to the market, For example Canada basically just has 6 major banks who basically dominate how everything works with the fed

✔

🕣 8:18pm
❔ sorry if you already answered this - is the problem set timed? or can we open it, work on it, and return to it repeatedly?\

✔ Yes, you can. I think that’s discussed in the instructions. It has an autosave, and you can open and close it as many times as you want. So, it’s basically something that you work on until the due date, and you can submit it before then, but there’s not really any point at all in submitting it because it automatically gets submitted on the due date.

🕣 8:18pm
❔ is there a way for us to access the newspapers if we do not have a Harvard email

✔ Probably not. Services like this will gate people based on whether or not you actually have an affiliation with Harvard based on whether or not you have the e-mail. So probably not. You can reach out to the library and check. I actually am a little bit frustrated. I’d like to. For those who don’t know the context here, you can if you have a Harvard e-mail address get free access to The Wall Street Journal and The Financial Times. Conceivably you may also be able to get access to Bloomberg, but I had difficulty getting access to Bloomberg because my Gmail account (one of my Gmail accounts) is the one that I initially signed up with for Harvard rather than doing my.edu which was a big mistake because now I don’t get free Bloomberg. And I wouldn’t mind having that because financial papers like this are not cheap.

🕣 8:20pm
❔ can you dive more into what it means when a bank is insolvent? what happens?

✔ Let’s dive into this after the next lecture. We’ll have a lot more to work with after that lecture, and we’ll be able to cover it much more rapidly.

🕣 8:21pm
❔ If the professor brings something up in class which is an example, should we focus on that

✔ Officially, you’re responsible for everything that he covers in class. But, as I mentioned before, he’s not really interested in facts and figures. He usually brings those up to illustrate something, to make the topic come alive, so typically those things are much less likely to be tested. I would not worry about the anecdotes. Frankly, I can’t say that they won’t be covered because the official policy is anything in lecture is fair game. But I’ve never seen it. So, really, I wouldn’t worry about attempting. You could take great notes.

🕣 8:22pm
❔ Can you talk about the midterm and final? Approx. how many questions will there be for the 1 hour time period?

✔ We did talk about this in the previous section. You’ll have plenty of time if you are well-prepared. He does not release the number of questions in advance. I would say, on average, there’s about 16 parts, but you don’t really know what that means anyway. I don’t know if 16 parts tells you very much, and I don’t even know if it’s true.

What I can tell you is that if you are well-prepared, you’re going to have plenty of time. What’s well-prepared? Well-prepared means that you know how to do it, you know the key concepts from the slides. If you had to do a problem similar to the Homer problems, you’d be able to sit down and, without very much pause, you’d kind of know where to start and you’d be able to just kind of sit down and start doing it. That’s what well-prepared means, and that’s the target that you really want to achieve in this class to make sure that you’re confident going in. You could look at a couple of things, but you’d be able to read the problem, kind of get where it’s going, and work through it. If you do that, you’re going to have absolutely no problem. Even if you’re significantly below that target, I don’t think you’re going to run out of time. I really don’t hear students complaining about running out of time in this class at all.

🕣 8:25pm
❔ 2 are exam questions like the problem sets?

✔ Don’t expect that the exam questions are going to be just like the problem set questions because they won’t. With that said, the general level of difficulty and the general type of questions are often very similar.

🕣 7:55pm
❔ On the Liquify Spectrum, where does physical  gold and silver fall?

✔ The price of physical gold and silver can oscillate, so if you need to convert it, you can look up charts online for the price of gold and silver. People will speculate on the price of gold and silver. Insofar as its value is oscillating, you may not be able to sell it at any given moment for what you would consider a good price. If people will say, “What’s safer? What do I know that I can get my money back on?” They’d rather have currency, or they’d rather have checking accounts, or they’d rather have some short-dated bonds than physical gold and silver. For example, firms if they have some cash that they need to keep for a rainy day that they know that they may be using for payroll, they won’t typically hold that as physical gold and silver. Because the price may fluctuate, and also because it actually isn’t that easy necessarily to convert it. There are issues of holding it and selling.

🕣 8:50pm
❔ is there a template or preferred format for the paper we are submitting for graduate work?

Below is the “style” I used that I found it online. Secondly, where should we reference the article we based the paper on?

✔ There’s no particular template, just be reasonable. There’s no particular format. What matters to us is that you are truly engaging in the topic and doing your best to apply the concepts that Bruce covers, or connect in some way. You can argue with the topics that he covered. You can compare and contrast, you can expand upon those. What we want really is for you to engage with the topics that Bruce covers.

See recording for more.

🕣
❔ so for example if we want to talk about liquidity/money supply with reference to gold or silver that is something we could approach

✔ Absolutely. I don’t, so you could talk about the role that gold and silver historically played as money. We’ve definitely talked about money and he’s given you examples of money that has been historically applied. So you could compare what he’s written in the slides to how money has been used historically if you wanted to. Another thing that you could do is you could talk about liquidity, how liquid is it?

We have access to Financial times through the Factiva database through Hollis
https://hollis.harvard.edu/primo-explore/fulldisplay?docid=01HVD_ALMA512220693980003941&context=L&vid=HVD2&search_scope=default_scope&isFrbr=true&tab=books&lang=en_US Source: an amazing student!

🕣 9:08am
❔ I was wondering what time the pre-recorded lectures will be posted on Tuesdays? Just trying to block off some time in my schedule each week to watch the lectures before we have our meetings with you. :)

✔ Anna: New videos have to be manually pushed through by myself (or another member of my team if I were ever to be out of office on a day when we are scheduled to post a new recording). I typically do this around 8:30 - 9 AM, but if you have another time in mind, please do let me know and I’d be happy to change my reminder to then.