The Big Short

Introduction

Remember the housing crisis of 2008 depicted in 'The Big Short'? While the financial instruments involved were complex, the underlying issues of risk assessment, understanding averages, and the potential for outliers played a crucial role. In this class, we'll delve into the basic statistical tools that can help us understand and analyze risk in the world of banking, even the kind of risks that contributed to the financial crisis

This class uses "The Big Short: The Real Story Behind the Financial Crisis" as a case study to explore fundamental statistical concepts and their relevance to the world of banking. We'll start by understanding the basic building blocks of statistics: mean, mode, range, and standard deviation, to analyze data and identify patterns. We'll then explore the normal distribution to understand expected outcomes and how deviations can signal potential risks. 

Finally, we'll touch upon the margin of error in the context of financial predictions and the limitations of data. Alongside these statistical concepts, we will demystify core banking principles, including loans, mortgages, and investments, and discuss how a lack of understanding these concepts, coupled with misinterpretations of data, contributed to the events portrayed in the movie. This class aims to provide a foundational understanding of both statistics and banking, using a real-world crisis as a compelling backdrop.