So that's fine.

Because we know that the book value per share is 5.

So we have to be careful.

It's the best price that someone's willing to give you for something.

So I'll pay 2 per share, which is a little bit of premium over the market value at the time, which was 1.

So let's call that market equity.

So the first one I'd like to parce is the idea of market value.

Our price is considerably higher than the current market price.

I'm just making up numbers.

So maybe I have a a billion of these CDOs.

Anyway, fair enough.

He sells that share and he gets 100 for it.

I think that's what I wanted a write here, market value of equity.

And these are the same people now, they're very adamant, that says, oh don't believe the market price.

And this is very relevant to what's going on in the world today.

So 5 million divided by 1 million is 5.

I'm going to make money that I otherwise wouldn't have made.

And this calculation, this multiplication of market price per share times the number of shares this is called the market cap

And with that, there's gonna be some electricity and stuff, we won't count all of it..you can produce some cotton. Just the plant cotton. Some raw cotton.

And that tells you that the book value per share is 4.

Here, what multiple are we paying?

let's say that they are traded in some market.

So I'm willing to give you 1 billion for those CDOs.

The price of admission.

So using FrontlineSMS they were able to group people into different categories and these people included farmers, who might want to know the coffee prices in different markets,

With this price, your product would not be competitive in the Japanese market.

The market drop has cleaned me out.

But let's parcel it a little bit more, cause these terms can be interesting.

And I'll do a bunch of videos on margins in the future.

It's very simple. It's cost plus markup.

And what we'll do in future videos is we'll actually explore situations in which that does happen.

So what's leftover?

So I don't buy it on two counts.

I'm going to talk about two stories today.

They're arguing that the few people who transacted did it out of desperation.

But anyway, the whole point of this video is, is when you have these asset bubbles, like in real estate, and you have this downplaying of risk, and this psychology that an asset class can only go up.

And then kind of the third common errors, my price hast to be less than my competitor's price.

So if you have a help at home, if you go to the doctor, the market value of all of those things are going to be put into GDP.

So what is happening here?

I love Lego Mindstorm, is which a wonderful way to experiment with these things.

So what's eventually going to happen with the demand increases the price will go up in this market and when the supply increases in this market, the price will go down.

Because when the company needs to raise money, that is used as kind of the fair market value of a company's shares.

And so microeconomics is how do people decide where to put those scarce resource, how do they decide where to deploy them.

I actually wrote that down here.

And maybe people would short Company A, and the price would move down.