When they assign a 120,000 market cap there...

And then what's left over, which is essentially so this is 2 million of equity, and then you'd have 2 million of equity here this 2 million of new equity, right?

So, remember, assets are equal to liabilites plus shareholder's equity, so if all of a sudden the market value of the equity, the market capitalization, for Ben's shoe company is 215,000... (That is the equity part right over here)

I'm going to keep that 2 billion in there.

What this says is look if each of those 10,000 slices of the equities are worth 21.50 then the entire equity portion is going to be what the market is valuing it at 215,000

What happens in a closed end fund is that all of the investors are essentially

So I made 50 off of this trade.

Let's think a little bit about leverage.

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

The investment bank at least starting off with all of the shares of the Special Purpose Entity.

liabilities plus equity.

So 26 minus 23 is equal to 3.

We're now moving into East Africa.

Our liabilities are still 3 billion.

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

Because the balance sheet is often called the company's books.

It's actually horrible.

let's say this is a publicly traded company.

The board of directors of a firm is essentially elected by the shareholders.

We take 7.5 million from this seed venture capitalist.

He lost a lot of money in the stock investment.

If I buy a share of IBM a lot of people say, oh, I saved I saved my money,

And there's 10 million individual shares.

And then the bank sets up a special purpose entity.

I use 100 gold pieces.

So 5 million of liabilities.

And the way you get that is, they're saying 3 a share and there are half a billion shares.

So this is my liabilities.

They invested in us.

So essentially, whoever lent Loan C, all of these shares are now their shares.

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

because they're both on the right hand side.

But you're like, no I want to sell them.

goodness.

It can do it by borrowing money, which is debt.

I put it in, I don't know, maybe I'm a good investor.

But it's really a measure of the same thing.

This is the building.

But what I want to do in this video is make it a little bit more tangible, to really understand exactly what you're buying when you buy a share of stock.

He's a stockbroker.

My new balance you will look like this 150 and 150.

I owe these people that money is 700 and my equity is 300.

So, what's the basic idea? So, let me get into Felzenszwalb's approach first.

Stock investments do not always yield profit.

And this is called the equity, or the owners' equity.