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Security Design 1

Part 1 of 3
Published on October 7, 2014   19 min

A selection of talks on Finance, Accounting & Economics

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0:00
Hello. My name is Tom Noe from Oxford University and I'm going to talk to you today about security design, the question of what securities firms should issue to finance investments.
0:13
I'm going to start by giving you a basic introduction to what the security design problem is.
0:20
This talk is going to essentially consider the optimal design of financial securities. What I'd like you to learn from this talk is the logic underlying the basic finance models of security choice and security design. Unfortunately, all things are limited and my time is limited. So, I'm not going to be able to cover all the technical details in this literature it's a very technical complex literature. I'm not going to be able to cover all the extensions of these models, how you can extend them to many periods, how you can extend them beyond for profit firms to say not for profit firms, but you will understand the logic of the security design models at the completion of this lecture. I'm very confident of that. How are you going to learn this? Well, you're going to learn it because we're going to cover in a fair moderate amount of detail, a few very classic example models of security design from the security design literature.
1:26
What is our question? What is it we're going to be talking about today? Security design. What is that? The question essentially is: If a firm has an investment opportunity or an entrepreneur, how should he finance the investment opportunity? What should he promise to outside investors in order to get them to provide the funds necessary to undertake the investment? That's the question we're talking about today.

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