The 3rd Session of “The Economic Way of Thinking” Lecture Series | Risk-return Thinking in Investment Decision-making

On the afternoon of March 17th, 2021, the 3rd Session of “The Economic Way of Thinking” Lecture Series was held in Auditorium 205 of the Central Main Building, with the theme of “Rational Investment”. The event was delivered by Prof. Wang Yong, Tenured Associate Professor of the School of Social Sciences, Tsinghua University to doctorate candidates of Institute for International and Area Studies, Tsinghua University (IIAS-THU).

This event was comprised of three parts. Prof. Wang Yong kicked off the lecture with investment and its classification, final value and compound interest thinking, and present value and discount thinking. He pointed out why general consumers seldom invest in antiques, calligraphy, painting and art collection and whether college students should invest in stocks. Then, he elaborated the concepts of final value and compound interest thinking from the definition of interest rate and its determinants, nominal interest rate and inflation, reasons for charging interest and simple interest and compound interest, followed by exponential discount put forward by Paul Samuelson, a world-class economist. He illustrated these concepts with the cases of commercial note discount to help participants understand it. In the second part of the lecture, Prof. Wang reviewed risks and their uncertainties and the sources and measures of risks. He also mentioned the classification, value and volatility of bonds and stocks, risk premium and other popular words closely related to our daily lives. At the end of the lecture, Prof. Wang explained rational decision-making of investment, how to choose investment portfolio, mean variance analysis, diversification and portfolio risks. In particular, he stressed the importance of diversified investment in real-world life.

Prof. Wang Yong is Tenured Associate Professor of the Institute of Economics at the School of Social Sciences, Tsinghua University and Member of the Academic Committee of IIAS-THU. Prof. Wang holds a PhD from Guanghua School of Management of Peking University and served as a postdoctoral fellow at Department of Economics of Harvard University. He was appointed as Deputy Director of the Institute of Economics at Tsinghua University in 2012 and further served as Executive Vice President of the Institute of Minsheng Economic Research at Tsinghua University. His research interest covers game theory and its applications, theories of Internet economy and enterprises and park economy.

Text by: Wang Zijing
Photography by: Wang Zijing