Fischer Black and Me

The video explores Fisher Black's 1970 financial model, focusing on risk tolerance and the role of banks. It contrasts this with the modern shadow banking system, where asset managers invest in residential mortgage-backed securities. The video explains how risk is managed through derivatives like interest rate swaps and credit default swaps, highlighting the roles of global funding banks and derivative dealers.

What was Fisher Black's perspective on the financial system in 1970?

How did Fisher Black differentiate between risk tolerant and risk intolerant people?

What role do capital funding banks play in the shadow banking system according to the text?

Explain the concept of using residential mortgage-backed securities as collateral.

What are the two key intermediaries mentioned in the text, and what roles do they serve?