Mmhm. It's a real estate investment.

I believe we should have the right to choose where we live.

Illiquidity is a different situation.

So he owns it outright so all of the 100,000 of asset value is actually his equity.

And what is required is a combination of physical capital, institutional capital, human capital and security, of course, is critical, but so is information.

That assets, A for assets, is equal to

Japanese automakers are investing heavily in new plant and equipment.

But we'll do a whole playlist on that.

And then on the equity side, because we have no liability, so in this case assets will be equal to equity.

But, to get there, the first thing to understand is just the capital structure and how capital markets work in general.

So you can see the snapshot at the beginning of the month 100 in equity snapshot at the end of the month 300 in equity.

less capital intensive that there's less money that's required

So that's a very handsome return.

And on the left hand side, I have no liabilities.

I've been a huge fan of enterprise and entrepreneurship since 1993.

It describes it right over here the change in equity, sometime the change in retained earnings, or just change in equity, that is going to be the 200 in net income that the company got over that time period.

It should start to make a little bit of intuitive sense

Or the other way to view it is, assets minus liabilities is equal to equity, right?

I'll do that in yellow.

One, what shares are share of

liabilities plus equity.

But Lehman Brothers' assets might be greater than its

I use 100 gold pieces.

And then the equity is, essentially we would look at this formula.

In a world without leverage so if I didn't have all this

So this is just another visual representation that

It doesn't sound like we borrowed money or anything.

Good health is his capital.

liabilities.

The company is open for equity participation by anybody.

So now it's getting interesting.

But let's say its assets are worth 1 million.

In return on equity, the numerator is the net income that we got, so it's 350,000.

Capitalist country.

And that's your equity.

So let me do that in a vibrant color.

That's 11,000.

Let me do equity in a different color.

It's all his equity.

Well, I have 250,000 left over.

But essentially what happened is the investors in the mortgage backed securities provided the money to the special purpose entity to essentially loan to the borrowers.

Remember liabilities plus equities are equal to assets.

How much equity do they have?

My liabilities would be 145,000.

So 26 billion of assets minus 23 billion of liabilities means that we have 3 billion of equity of shareholders' equity.