So this is really presenting a particular paper that we submitted at Cox High last year. So this is really at the intersection of artificial intelligence and cognitive science. It's a study into active work learning through self supervision. So we are modeling processes that also happen in human language learning, but we're modeling them using AI. And I work together with Afra Ali Shadi, my supervisor at CSAI, and Ali Liza Mahmoudi Kamalovac, who was a master student at the time, doing a research project with us, and is currently working on his PhD in Robot Assisted Language Learning. Okay, so I wanted to open with this tweet with a quote from Mian Lecun, who says long term progress in AI will come from programs that just watch videos all day and learn like a baby. Now, if you're a parent, I don't know what your opinions on this are, but this uses a lot of joking responses on Twitter, such as Jacob Eisenstein saying, as anyone who has spent even a minute or two with babies knows they learn exclusively by putting random objects in their mouth. Now, of course, this is a joke, right. But what I find quite interesting about this response is that in the second case, the baby is not just watching videos right the baby is actively doing something is actively exploring their environment right. So even though it's a joke there is a there is a grain of truth in there. And this is kind of the type of the idea that we are we are modeling in our research. So, in cognitive science. One of the areas that studies a lot is studying which words map to which objects in the environment right so it is very important of course to be able to talk about things in the world is you need to know the correct label for objects. And one of the ways in which this is often modeled is through cross situation and word learning. There are many different implementations but the basic idea is always, if you look at a lot of occurrences of objects and words in different situations, eventually you will be able to figure out which ones are are mapped to each other. Now, as I said, there are many different implementations and algorithms proposed for this but they, they all have in common that typically they the learner just happens upon language and visual input right so the learner just happens to see objects and get language and visual input. And what we're trying to do here is actually when you when you think about parents and their children, very often parents will will talk about objects that the child is already attended attending to we notice from language acquisition studies that this is the case, parents are very, very really try to follow their child's attention. So we thought okay, potentially children have the opportunity to shape their own language input right. So what if they do so, based on their current language knowledge, right. So what if they are particularly curious about objects that they don't really know the correct label for, for example, how does that shape learning so that's the basic idea. So we try to try to see if selecting input, according to some some some measure of what your current language knowledge is how that would, how that would shape the learning trajectory. So what is the task that we're, we're modeling, we're modeling. Basically a two part task. So one is figuring out which object is the correct reference for a label and the other is which is the correct label for, for, for an object, right. So we have a comprehension task and a production task. So what about our model is that we have these two modules, but they can actually feed into each other.  Here's a word outputs outputs the object that I think is, it thinks is the most likely reference, then we can, again, feed this object to the production module which outputs a label. So this is a sort of introspective quality of the model that we can use both to train it in in a self supervised way and also to select input that is, that is relevant in the current state of knowledge.  The production module tries to match the finder correct object that goes with this label and says okay this this second object this this son that is probably the, the reference is wrong right but it doesn't know that then we feed this object to the production module which outputs a label and produces a with with a label right so we have we put in this object and we have put a label. Now what can we, how can we use this for learning. Well we just compare compare the input at the start to the output. Right. So in this case the input to the comprehension module does not match the output of the production module. It doesn't match we need to we know that we made some mistake and we need to move away from this from this matching. We don't really know where the mistake is right, either the comprehension module made a mistake or production module, but in any case, in its entirety it didn't perform correctly. We're going to go a little bit more technical for those of you who are familiar with with our neural networks work. So, basically what we do is we have word embeddings that are random at the start, and we concatenate them with FGT representation for every object in the scene so we do this once for every object in the scene. We output one value per for objects. So basically we have kind of like an MOP right. So what we do this once for every object in the scene. So we have as many output nodes as there are objects in the scene. We can do, and we can interpret these as as the likelihood that this is a correct bearing of, of an object and a word. Now, then what we can do is we can input an object in the scene again represented as this VGG vectors which are sort of like high level visual features. And this production module outputs a distribution over the vocabulary. So, in practice what we use to train the model is, is the cross entropy between this, this output distribution here and the one how to coding of the word we input in the first thing. We back propagate through this whole thing and we can actually do that because we, yeah, okay, maybe I'm going into too many, many technical details but the reason we can actually do that is that we don't during training we don't input just one object but we input a weighted sum of all of the objects in the scene so we treat these, these values here as attention. That's the technical part. So now how do we use this two part thing to also select input right because that's the other part of this study. Now we sort of flip the modules. So what we do because we want to know for each object in the scene, would it be helpful to receive the label at this point right would it be helpful to receive language input for this one. So we, for every object in the scene we input the objects to the production module which outputs a label. Then we feed this label together with all of the objects in the scene through to the comprehension module which outputs an object again, and again we can, we can see whether this matches or not. Now how do we actually use that to see if this would be helpful. What we can do is we can look at the mismatch so basically just is this the same object here or not. And that that is what we call subjective novelty so if these two if these this mapping is very wrong, then subjective novelty will be very high right so it's basically the the average absolute difference between the output notes. And then we have a second measure which is called plasticity. And this is actually the highest for those items for which the learner is kind of like unsure so it doesn't it hasn't made up his mind very, very, very clearly. For those of you who are familiar with how neural networks are trained this is actually based on the, the, the gradient of the output activation function which means that if we do a single update for for a model that has this kind of pattern that would actually bring a very big change in in the, in the, in the output representation, let's say. Okay, so we have a measure that says whether we are wrong and we have a measure that says whether we expect to be wrong right that's the thing and a measure that says whether we are have made up our mind very clearly or not. And then we have curiosity, which is basically the product of the two. So it considers both these factors. And then we have another condition which is random. So we just get one of the objects in the scene at random. That's the one that we get a label for. Let's see how these training results, how these results compare. So, first of all, we see is curiosity model strange and a curious condition or performing the best. It's getting better than models trained in a random condition, but this is not actually the case for plasticity, and particularly for subjective novelty such objective novelty is really laying behind. Right. And another thing that we can see is that the standard deviation so this is this average toward 20 runs, the standard deviation for most in the curious condition is the lowest which means that most of the runs kind of converge to the same level right whereas for the condition there's a bit more variation and for plasticity as well. So the other comprehensive results production results I don't want to go into deeply, we don't really have the time I think but it's kind of shows the same pattern but the numbers are lower the reason is that we now have 4000 category. So, in other words to choose from rather than three objects that on average, right, so it's a much more difficult task. That's one of the reasons, at least. I wanted to show you these plots, which are the results after each epoch of training for all of the models that we train so we train 20 models in every condition. So these are on training data after each epoch of training. Let's first look at the curious curious models curious models are the orange ones so as you can see, they are both have the highest accuracy in training and and on test data, and also all of the lines are kind of like close together right so they kind of converge to this level quite robustly. So for for the blue one which is random. Some of the lines kind of converge to similar levels, right. But it this is not robustly the case so some of these guys don't really end up at the same level. And for this is seated pictures a little bit different but it's kind of similar. And another thing to see is that even at the very after the very first epoch of training already. It's sort of a leg up. Now you may wonder about subjective novelty which is the odd one out right this these green bizarre green lines here and they're performing exactly a baseline here. So what subjective novelty seems to be doing is it's very good for remembering your training data. It's not good at all for learning anything that generalizes. Okay, that was the results. So basically curious exploration does help learning faster more robust more accurate, but subjective novelty and specificity alone do not. Thank you.


as most of you have noticed by now we have been going from manufactured crisis to manufactured crisis and there is an obvious end goal to each of those crises lining up with the new world envisioned by whatever psycho alien is in charge of this planet because I have a hard time believing it's a human Elon Musk even wore a jacket to the Met Gala reading Novus Ordo Sachlorum a new order of the ages as it states on the dollar bill I mean what is Elon Musk even doing at the Met Gala he's a tech guy I was actually going to do a video about him something like Elon Musk is here to make the new world order look cool but he is really just an actor a pawn for all of the strings being pulled behind the scenes one person cannot do as much as Elon Musk is claimed to be doing a few simple reasons why they need him one massive profit behind market manipulation of ridiculously overvalued Tesla Bitcoin Dogecoin and anything this scumbag tweets about to making microchips satellites various technology seem progressive and innovative as opposed to psycho control over your brain three claiming he owns Twitter will make people point the finger at him as opposed to the government agents censoring people through the Department of Homeland Securities disinformation government sport what was even bigger news last week was a Supreme Court leak about Roe versus Wade being overturned and I'm inclined to not even entertain any of this information because there is no such thing as a leak when they control everything you see and hear this was to elicit a specific reaction if you don't know what Roe versus Wade is it was a court decision which allows a woman to have abortion without excessive government restriction and any of these stories that hit the main main mainstream not one of them has ever been truth there might be some side stuff that's relatively unheard of some people might have seen it the hidden truth but never super mainstream news someone actually registered a website for this specific cause two weeks before the news was leaked Jewish rally for abortion justice org and of course the main purpose of the website is to ask for donations we know the government loves abortion Planned Parenthood is a business so is big pharma with Pfizer publishing eight billion dollars of profit in the first quarter of this year after experimenting on pregnant women and the rest of the population so you know the government doesn't actually want women to give birth and they actually want more abortion that's pretty pretty clear of course we can't forget the Russia-Ukraine war and about two months ago when this was new and exciting stuff some guy took a trip to the Ukraine to see it for himself describing it as a Hollywood movie set now who knows if he's telling the truth or not but our politicians don't seem too afraid of stepping foot in Ukraine Pelosi is flying there to walk around in a bright blue suit yes Kiev is under constant shelling yet the politicians are walking around like tourists Trudeau in a freshly dry clean suit not a wrinkle on that suit in a war zone and I'm sure some of you heard that they were sending 33 billion dollars very special number in aid to the Ukraine but absolutely zero proof of that and really no proof for anything else they say in the news people just believe it and I think that money sending aspect of it is them trying to convey in the news this is a global problem the US is sending a massive amount of money to the Ukraine therefore the US is involved so I mean I could do stuff like this every week guys there's just so much ridiculous stuff in the media and you basically have to say okay why are they lying to us now and how is it possible that everyone is so silly they believe half of the stuff I can't really think of anything else for this week guys probably because I am Wi-Fi shielding my body and not my brain but you guys can go to Wi-Fi shielding comm to check out the joggers as well as sweatshirt and a bunch of other radiation protective devices so the government doesn't fry your brain outside of that if you guys could please drop a like on the video leave a comment down below subscribe so that YouTube can unsubscribe you next week and be sure to check that notification bell so they don't notify you of my videos therefore you can check out all of my other businesses on frank-to-finale.com to support me thanks again guys I'll see you for tomorrow


So you don't know how to spin, not a problem. Left click on an edge in order to spin it around. This is an easy way to rotate what points the edge is connected to. Hope that helps, and as always, hope you have a fantastic day, and I'll see you around.


Thanks for checking out this movie review video. This is for the 1963 Italian horror film The Whip and the Body. It's a Mario Baba film, and if you are into Mario Baba or want to know more about Mario Baba, I actually created an entire playlist on my channel for Mario Baba film reviews. So I'm getting deep in Baba, and that's because Shudder dumped a bunch of Mario Baba films on their streaming service. And when I'm doing this review, that's where I watch the film, and it's still there, at least as far as I know. Directed by Mario Baba, like I said, who's done other films such as Black Sunday, Black Sabbath, A Bay of Blood, Blood and Black Lace, Planet of the Vampires, Kill Baby Kill, Five Dolls for an August Moon, Hatchet for the Honeymoon, and The Girl Who Knew Too Much, Oh, and Shock, which I have reviews at the moment for Blood and Black Lace, Shock, and the... what's the other one? Oh, A Bay of Blood, sorry. This one's written by a few people. Ernesto Gestaldi being one who also wrote scripts for The Vampire and the Ballerina, Werewolf and a Girl's Dormitory. That sounds interesting. The Strange Vice of Mrs. Ward, which is a great giola film, and I have a review for it on my channel. The Case of the Scorpions Tale, All the Colors of the Dark, which I also have a review for. The Case of the Bloody Iris, Your Vice is a Locked Room and Only I Have the Key. Torso, which I've heard a lot of people say is one of the best giola films. The Suspicious Death of a Minor and the Scorpion with Two Tales, so obviously that guy was involved in doing a lot of giola writing later on in life. Also, Ugo Guerra, who did scripts for The Rage Within and a bunch of, you know, war and pirate films, which was a whole phase within Italian filmmaking. And Luciano Martino, who did scripts for Two Hell and Back, So Sweet, So Perverse, Your Vice is a Locked Room and Only I Have the Key, Screamers and Delirium. Gestaldi was shown the film The Pit in the Pendulum by Roger Corman and was told to kind of write something similar to that. Now, this kind of highlights how influential Roger Corman is. We've all known this for quite some time that Corman has influenced so many filmmakers, so many film writers. But once I read this in my research, I was like, oh my gosh, I didn't know that his influence went all the way to Italy. I mean, I knew it was steeped very much in American filmmaking and probably English filmmaking as well. But Italian, that was news to me. This film was released in the United Kingdom as Night is the Phantom and in the United States as what? Literally, it was W-H-A-T with an exclamation point. So what? Not a good title, but you know, the Night is the Phantom is much better. But The Whip in the Body, also not that great. I think Night is the Phantom was probably the best title it went by. The cast and crew were made to use English names for this as a way to kind of try and fool audiences to get a better chance of distribution for the film in the U.K. and the U.S. So, okay. I think honestly, just the fact that they had Christopher Lee in the film should have probably been enough to get that distribution. Although honestly, I would have liked to have seen Christopher Lee be in a more substantial role in the film. I mean, his role is important to the film and is focused upon, but I want to see him in it more because his acting is so great, obviously, especially in this film. When he's on screen, his just his gesturing, the way he moves, it's like he glides into a scene and his delivery, like the look on his face, his physical acting is wonderful. And physical acting is pretty much all you can focus on in this because one of the other tidbits to know is they dubbed over everyone's voices, including Christopher Lee's, and didn't get Christopher Lee to dub over his own voice. So that's not Christopher Lee's voice in the film. They missed an opportunity there, they should have stuck with that. But regardless, he did a great job. Like the film, A Bay of Blood, also done by Baba, it starts with a body of water as the sun is going down and then there's a castle. That is exactly what happens in the beginning of Bay of Blood. It's weird. And like I said in my review for the film Shock, it seems that Baba really likes to have bodies of water in his films. This is no exception at all. And then with this one, he also has a castle. So I wrote, and also like in the beginning of A Bay of Blood, the carefully placed lightning and use of cool looking shadows is outstanding. So after showing the outside of the castle, obviously they go to the inside of the castle and there's lightning that's used, much like in A Bay of Blood. And just the aesthetic of the way light and shadows are used, especially in this film, but in A Bay of Blood it's done as well. So cool. Looks so good. And it's not just regular light and shadows in this particular film, it's also colored lights and how those get used, which I'll talk about a little bit more later with specific scenes I want to call out as being particularly good looking. But overall, I love the visuals that Baba gets in this film and a lot of his other films. And like I said, that play of like a light versus shadow and how it falls on characters, faces and how they move through it is so mesmerizing to watch in my opinion. Overall, I don't think this is like a great film, but from a visual standpoint, I love watching it. It's just so interesting because of that. There's never a question that the character of Kurt, who's the one played by Christopher Lee, is a bad guy in this film because as soon as he basically shows up, everyone voices his displeasure for him as a person. Then you get the moment of him going and committing violence against Nevenka, the main character. And you're just like, okay, I already thought he was a bad guy because everyone hates him and says he's a bad guy. Now we know even further. And you know, crossing into this kind of almost rape type area where he just started whipping her, which for back then was probably pretty shocking. You know, nowadays it's a little bit different because we've seen so much worse, but back then it was probably a pretty shocking moment, honestly. Like I wrote down, but Bear's repeating, Christopher Lee's acting pulls you into the movie. That's another thing about it. It really pulls you into the movie whenever he's on screen. And I wrote he has a way of slickly gliding through his scenes. And that is why I wanted more of him in the film. He should have had way more screen time also because of he was a big name. So I don't know. The moment Kurt starts whipping Nevenka and says she always liked violence. It seems to be their phrase shockingly alluring moment. And like I was saying, it kind of is, but watching it nowadays, it's not as much of an impact. Now it's interesting because later on they kind of bring it into, well, there are a few moments where they show these little glimpses of Nevenka actually kind of liking the violence after it's happened. But while it's going, you know, leading up to it and while it's happening, she's very much resisting it. So that's why I say there's kind of like this rape subtext going, well, maybe not even subtext, but it's almost like rape.  But there's this weird gray area where like she's refusing it and she doesn't want it. So that's kind of rape. And then she likes it. So I don't really like the character. The character is very messy, especially for nowadays. Back then I understand it was very different. The castle setting for this is excellent. The way it's done up for the scenes, the way they did the set design, really, really good. It really adds a lot to the atmosphere and just the overall feel of the film. So I really like the setting of it. Looks great. The part where Kurt gets stabbed, it really legitimately looked like the curtains stabbed him. I think in the end it was supposed to have been Nevenka hiding in the curtains and she stabbed him and then got away. But it really seemed like the curtains stabbed him. It looked weird. It looked weird and I laughed because it was pretty funny. And it was unexpected. That's another thing about it. I like the sound of the whip when they were using it, when it initially comes up and you kind of think, oh, he's in, you know, his ghost is haunting, he's in the castle. And then initially she's, you know, Nevenka's looking for the source of it and she finds that it's, you know, some windows that it opened and a tree limb is kind of like whipping into the castle and making that whipping noise. I think that was cool. Not just the reveal, but the way that shot looked because the whipping was coming at the camera and it worked really well for that reason. The sound was a little weird, but it worked, the actual visuals of it. Because only Nevenka is experiencing the ghost of Kurt. You do kind of start to wonder if it's actually happening or if this is another one of those films, which, you know, this was done a lot in film, especially older times, because now it's more cliche. There's the question of, is this just in her head? Is she a reliable narrator for this film or not, or for the story or not? And you, I did, as an audience member, question it a few times. I was like, we're seeing it from her perspective. And when she says things to other people, no one else has experienced it. But then eventually at the end, the, I forget the character's name, that guy, the main guy who I think was her husband, he ends up experiencing it. And we find out that it wasn't all BS. But for a lot of the film, you kind of question, is this real or is it in her head? The shot of Kurt's hand coming at the camera through the dark is amazing. That's when Nevenka was in her bedroom and he shows up in her bedroom. Yeah, his hand coming through the dark and you don't see any more of him. And it's coming right at the camera. So cool. And Bob has done that before. In my review for the film Shock, I was talking about how there were a bunch of shots where things are coming at the camera and it just looks good. And also like I just referenced about, you know, the tree limb whipping at the camera, those things look cool because I think it immerses you more in the story. And it makes you kind of feel more like you're there. Like those things are interacting with you specifically as a viewer pulling you into the actual story. So I like that. The music in this film looms very heavily throughout it, which I really don't enjoy, but I understand it because of the time period. You know, it was common then and sometimes it's still kind of common, but you know, music heavy in the film. I like more restrained music, but you know, it is what it is. You know, you can't change that. That's the way it was. I accept that. So it bothers me, but I'm really hold it against the film. The lighting color changes on Kurt's face as he moved towards Nevenka in the dark were extremely well done. It was awesome. That one scene where like he's stationary and his face is kind of has like a blueish hue to it. And then he starts, I think it's blue. Yeah, he starts off with it with like a blueish hue on his face. And then he starts moving and then one side of his face is green. And then it's dark and then it's red on the other side. I think those types of shots are really cool. And I love that Baba does those types of visuals. A lot of his directorial stuff, I really like his kind of flair, his panache for things. And it actually makes me wonder if, you know, his kind of uses of color like that in that film, did that go on to influence anyone like Dario Argento? I don't know. It's a question. I do like how Nevenka thinks she's going to kill Kurt again, but ends up stabbing herself instead in the end.  And then I just thought, you know, she's fully embracing him. She's going to be with him, all that stuff. And then she pulls out the knife from out of nowhere.  But then you see from the standpoint of the other characters that there's nobody there, like she's hugging nothing, but she has the knife. And that's when it dawned on me.  And that's exactly what happened. I like that twist to it. It's kind of cool. And in the end, she basically did end up becoming, you know, being with him because she kills herself, she becomes spirit. They can be together again. And I guess she kind of, she had said at one point that like he, she did like him, like that was her true love kind of, I guess, something like that. Maybe it wasn't all just like this fetish thing. I don't know. The shot construction, camera movements and lighting are the real reasons to watch this film. Like I said, the story is not that great. It's kind of the, but the looks, you know, like I said, the set design is so great. The camera movements are great. The, just the construction of each of the scenes is great. Chris release is great. You know, there are a lot of great things to the film, but the stories just is lacking. It's lacking for sure. All the characters are underdeveloped or I'm sorry, undeveloped. There really is no development with any of the characters really, except for the Venka kind of, and they're all one-dimensional, which makes it really kind of hard to feel invested in the film in general. I mean, I know that Nevenka is the main character. And so she's supposed to be the focal point, but you don't really have much of any backstory on her. You don't have backstory on like anyone for the most part. And it's like, how are you supposed to really care about things? You know, they just jump into things and just be like, Oh, just experience this stuff going on. It just doesn't work that well. This film, I don't think intentionally, but now it ends up kind of speaking to who are people who are victimized by someone who often feel that that person is still coming to get them, even though they're not actually around. Now, obviously that scene in that Kurt is dead, but Nevenka keeps thinking that he's coming for her. And he is like his ghost is in this, but I think it kind of highlights that people who have been victimized still carry that mentality. Like they can't get away from it, the feeling that that person's still coming for them.   So that's the traumatic experience. The specter of Kurt Haunst and Nevenka, because he needs to victimize her again, that's the other thing to note about this, is that Kurt feels this, that he must have control of Nevenka, must have control of her. And so he's even in the afterlife coming after her, trying to control her, trying to have her.  I think that was kind of premeditated by him as a ghost. He gets her to kill herself so that they can spiritually be together and he will have her again and control her. But then there is that little bit of question as to does she want that or not? Because they do this thing where they're going between she doesn't want it, she does want it. So if there was more to the story, maybe you would find that out. But no, but yeah. So anyway, not my favorite of Baba's films. It was okay. Like I said, the visuals are great. So it was good to watch once. I don't think this is one I would revisit really. But so that makes it hard to rate it a little bit. So out of five stars with half stars in play, I got to go two and a half on the film because I was between kind of two and two and a half, but the visuals are so good and I like Christopher Lee in it. And some of those shot constructions are really awesome in the castle setting. So I'm going to give it two and a half. So I'm pretty in the middle on the film. But let me know your thoughts. Let's put some comments down here. How do you feel about the whip and the body? Do you like me wish there was more Christopher Lee in this? That's really what this film needed in addition to more story and backstory. But yeah, let me know your opinions and we'll talk about it. But do me a quick favor, hit that subscribe button. If you like this video or any video I've ever done, that is your best way to repay me. And I deeply, deeply appreciate that literally whenever a new person subscribes, I make sure I look at that person's profile and think to myself, that is awesome. Thank you to this person. I just want to grow the community here, you know.  But thank you for checking this out and taking your time to watch it. Until next time, keep it brutal.


Six easy and free ways to get more views on YouTube in 2021. Hey guys, if you want to get more views on your YouTube videos, you're going to want to watch this video to the very end. I'm going to give you some ways to do it that are guaranteed to work. So let's get going. Hey, let's look at the facts. There are one billion views on YouTube every single day. That's more than Netflix and Facebook videos put together. So you do want to be there. Now, before we get into all those ways of doing this stuff, don't forget to subscribe to my channel, hit the button down there. If it's red, turn it gray. And don't forget to bring the bell, turn on all bell notifications so that you're notified every single time I go live or I do a new video. And a thumbs up would be greatly appreciated. Okay, so let's talk about how to get started here first. The first thing you want to do is actually plan your video. You want to set up each section of the video so that it reaches your goal. And your goal should be for people to do something to click or to have some type of call to action. Just like in this video in the beginning, I said, make sure you subscribe and make sure you like the video. Make sure you ring the bell, turn on all bell notifications. I was letting you know that is my goal in this video is to get you to do that. Now, to do that, I've got to provide good content for you so that you watch the video. The next thing you want to do is write a script. Now, it doesn't have to be word for word. It can be bullet points. It could be reminders for you, but you do have to have some sort of organization so that the video flows well. Next up is to create a shot list. Do you want camera angles from the right, from the left, in front of you? Do you want them zoomed in? Now, we do a lot of our shot list in editing. We shoot straight on and then we can move the screen around. We can put things on the screen. We can add things to the screen, words, directions, whatever, but make sure you have a shot list. Next up is organize your scene. What is going to be in the background? Now, we have a backdrop here. We have our lighting set up. We have a couple props on the desk here, but the point is make sure that scene is organized. You don't want a lot of fluttered things in the background. They're going to be distracting to the main focus of your video. Next up is prepare yourself. You can shoot a few scenes in advance to get used to the camera, get used to the angle, stop and then take a look at it and see what you've got set up. Now, in this studio here where I've got it set up, we do the same set up for each video, so I keep all the lights in the same place, the camera in the same place, so that way we're always set up. You might not be able to do that in the beginning. However, if you can, it makes it a whole lot easier for shooting videos. Then, of course, once you've done all that, you're going to be at the edit stage. Make sure you edit your video. Don't just take a video that's raw and not edited. I'll tell you, I make a lot of mistakes in my videos, but those are all edited out so that the final product is something that the viewer is going to want to watch. Next step is upload your video to YouTube and it's not just uploading your video. It's having the right title. It's having the right tags. It's having a description in there. All these things really matter, so you don't want to just haphazardly put your video up. You want to make sure you have a good thumbnail so that people even want to click on it. Okay, now let's get into all those ways you can get more views. Number one, the most important, is create good content. It's really that simple. Create good content. Create content that people are going to want to watch, that they're going to stick with, that they're going to get something out of. Now, YouTube is used primarily for two different things. Education and entertainment. People go to YouTube 60% of the time to be educated on some subject. 40% of the time they're there for education. If you can combine those two, you're really doing something good. Number two, encourage people to subscribe. And if you haven't done so so far, go down there and hit that subscribe button. Why this is so important is that the more subscribers you have when a video goes live and they have their notifications turned on, they'll get notified and you'll get more views. But if you don't encourage them to subscribe, they may not do it on their own. They may not think of it, so you have to let them know. And I will tell you this, you want to let them know in the beginning of the video, just like I did because maybe they get interrupted and they can't watch the entire video. They can't get to the end. If you only tell them to subscribe at the end of the video, you're going to miss out on a lot of subscribers. Number three, create playlists to keep people watching. Now, if they start watching one of my videos and it's in a playlist and there are other related videos in that playlist, let's say it's a playlist on drop shipping and they go to that playlist and they watch a video, it's going to suggest more videos from that playlist and it's going to keep them on the platform and it's going to get me more views. You can do the same thing. Number four, understand the importance of watch time. Watch time is huge for YouTube. And I want you to think of watch time in a couple different areas. It's not just did they watch a lot of your videos. It's how much of each video they watched. Now, something that comes into play here is that you've got to have long enough videos so that you can rack up the watch time you need. If you want your channel monetized, as you probably know, you need 1,000 subscribers and 4,000 hours of watch time. If you're only making two or three minute videos, let's say you're making two minute videos and they watch 50% of those videos. That's only one minute of watch time. But let's say you're making 10 minute videos and they're watching 50% of those videos. That's five minutes of watch time. So the length of your video is very important. Now, is that to say that you just want to create a whole bunch of long videos? The answer is no.  So you don't want to create an hour long video if you could do that same video in 10 minutes. On the flip side, YouTube says we want videos that are at least eight minutes long. Now, why would they want that? Well, they want that because they want to put ads on your videos. You've got to understand the business model of YouTube is for them to make money on ads. And the way they're going to make money on ads is if they can put more ads out there. And the way they're going to be able to put more ads out there is if your videos are longer. So if you're making two minute videos, they can't put many ads there. They're not going to want to show your videos. If you're making eight minutes or longer videos with 14 minutes, those videos they can put a lot of ads on. Some people will do 30 minute videos or hour long videos. To do those, make sure you have the right content, though. We primarily stick to 10 to 14 minutes. And what also goes along with the length of these videos is how many videos you have. The more videos you have, the more opportunity you have to get more watch time. So if you're thinking about growing your YouTube channel and you only want to do one video a month, to get enough watch time. But if you're doing two or three videos a week, which I do suggest two or three videos a week, then you're going to be able to build up your watch time much, much faster. If you don't have the content there, obviously you can't get a lot of watch time. So that's what you want to do. Now I upload five videos a week. That's five a week. I don't film five videos a week, though. Every two weeks I will film 10 to 12 videos, a couple extras every now and then like what I'm doing today to have those extras in case I need them. You can batch them and then you can schedule them to go live on certain days and times. Now keep in mind, YouTube also shows your channel and your watch time has to do with your channel as much as it does the individual videos. YouTube has a very complicated algorithm. However, they do look at how much watch time a particular channel is getting. So if you only have one or two videos that's getting a lot of views and the rest of them aren't getting any views, your watch time for that channel will be low. We want to keep our watch time for a channel high so that YouTube suggests that channel to more and more people. But it's like I said in the beginning, make sure it's quality. Quality will get you more watch time than just long videos. Now if you can have long, high quality videos, that's the way to go. Number five, optimize your video titles. This is so very important, guys. You're not making videos that you want to make. You need to make videos that people are searching for. That's really a demand for certain subjects out there. Now how do you know what subjects those are? Use a tool like TubeBuddy. Down in the description below, I will have a link so you can get a free TubeBuddy account that will help you find titles that people are searching for. That will help you maximize the amount of views you get. Down in the link, like I say, grab the TubeBuddy link and go to that link. That's my affiliate link and you can get the free software. If you decide you want to go for the paid version, it will also give you 30% off of the paid version. So make sure you have that tool and that way you're going to get more views also. One thing I want to add to that, whatever your title is, make sure you save that video file with the same title. YouTube actually looks at the name of the file. So if you have ABC123 is a name for the particular file as you upload it, you're going to lose some SEO. You want to make sure the name of that file is the same as the title on YouTube. That way you're going to gain more on the algorithm and get more views. When deciding on your title also, you want to keep it between 60 and 70 characters. That is probably the perfect sweet spot for having a title. It's going to get shown that way and you don't want to waste it and only have 20 characters in there because you've got some more space in there that you could get some more actual SEO from. The title for your ad copy video that you've spent 80 cents out of your $1. That title really matters. Number 6, create compelling thumbnails. Thumbnails are so important. Think about it guys.  I see a lot of people upload videos and they could be great videos. They may be awesome videos, but they didn't even and what's going to happen is on YouTube if you don't make a thumbnail, it's going to grab a screenshot from your video. It may not be a flattering screenshot depending on what you're doing with your face or what's going on, so you don't want to leave it up to chance. You want to have a thumbnail that's going to pop. Use bright colors, yellow, red. If you're going to put words on your thumbnail and it's still up to debate whether you should even do that, make sure it's very few words. Two, three, maybe max four words on that thumbnail. You don't want to have a lot of words on there because understand if they're looking on their smartphone and they're scrolling through, those words are going to be very tiny and they're not going to see them anyhow. You want to have something on there that's going to gain their attention. People's faces really does gain their attention. Don't have them far backwards from their foot to their head picture. Make sure it's a close-up picture of their face. Maybe doing something, showing something that's a great idea for thumbnails. Here's a screenshot here and as you can see, most of these really pop. They have a lot of bright colors. They have somebody's face in them, my face, and they get people's attention. That's the kind of thumbnails that you want to have on your videos. With those suggestions, you can definitely get more views on your videos and grow your channel. I hope you enjoyed this video. I hope you got something out of it. I also have a free course. If you look down there, it's a $97 course. I'm giving it away absolutely free. All you have to do is click the link and learn. Don't forget, if you haven't done so, my gosh, you need to subscribe. You need to hit that subscribe button down there and ring the bell. Turn on all bell notifications so you're notified each and every time I do one of these videos. Guys, thank you so much for watching this video. I really appreciate it. I'll see you in the next one. I'll see you in my channel.


Hello and welcome to the session. This is Professor Farhad in which we would look at the fault risk and bond ratings. Those topics are covered on the CPA BEC section as well as the CFA exam. FarhadLectures.com is a website that's going to supplement your CPA preparation as well as your accounting and finance courses. Please check it out. LinkedIn is where you will need to connect with me if you haven't done so. YouTube please subscribe to my channel. I have 1800 plus accounting, auditing, finance, tax as well as Excel tutorial. If you like my lectures, please like them and share them. If they benefit you, it means they might benefit other people. Share the wealth. Connect with me on Instagram and Facebook and this is my website once again, farhadlectures.com to supplement your accounting and finance as well as CPA preparation. Let's talk about bonds and we can break the bonds into two categories. Think of grading. Think of when you take a class, you are giving a grade, either an A, A minus, B plus, C, whatever that grade is. Also, when you borrow money from the bank, each individual will be judged based on their credit score. And this is what we are talking about now. For example, as individual, the highest credit score is 850. So if you have an 8, you know, if you have an 840 credit score, I'm very proud of my credit score. My credit score is above 800. You will get the best interest rate available that the bank has to offer. Now, bonds go through the same grading procedures. But if you want to break the bond, the bond rating into two categories, and those will be investment grade and speculative or junk or high yield grade. So what is an investment grade bond? An investment grade bond is a bond rated AAA and above by SMP or BAA and above by Moody's. So who's SMP, Standard Importers and Moody's? Those are the rating agencies. Those are not the only one. Those are the biggest one, the most famous one. And what they do is they rate you. They rate your bond, whether it's, for example, SMP, they would use AAA. It has the highest quality. And basically, if you're AAA, it means that rated has the highest credit rating capacity to pay interest and principle extremely strong. It means if you buy this bond, there's practically no chance of not getting the money in the interest. That's what they're saying. It's very strong. Then you have AA. AA means has a very strong capacity to pay interest together with the highest rating. This group compromised the high grade bond class. So you want to be either AAA or AA or Moody's. They have A and capital and lower case two A's and upper case and lower case A's. Just the way they use the rating, but they're basically the same thing. Then you could be AA or BBB or B, which is considered high quality. Again, you could read about what does that mean when they say AAB? Well, is regarding as having adequate capacity to pay interest and repay the principle, whereas normally exhibit adequate protection parameters, adverse economic condition or changing circumstances are more likely to lead to a weakened capacity to pay interest. So simply put, if you are AAB, you're not as good as AAB is not as good as AAA. And if you have AAB, then you become what's called speculative or grade or junk bond. So you really want to be, if you want to be investment grade, you want to stay in these two categories. Now speculative grade or junk bond, a bond rated AA or lower by SMP is considered or lowered by Moody's. Those are considered speculative or junk bond. So here's speculative or junk bond. Now, why that's, why is that important? That is important because if you are speculative or a junk or junk bond or high yield bond, what's going to happen is the company that, that, that is rated that way, Durban's is rated that way, they have to pay higher interest cost. Because if you are going to be investing in those bonds, you need to be compensated. It means for the company that's a higher cost, that's more expenses, that's lower profit. Okay, but the investor, the lender, they want to be compensated for that risk. Now the speculative bond before 1997, all almost all bonds were falling angel. Falling angels mean to get to these junk status, you were before investment grade. Okay, bond issued by the firm had originally had an investment grade, then their situation deteriorated and they went from this category to this category. Okay, however, firms began to issue in 1977 original issue junk bond. Now starting in 1977, 1977, what happened is companies started to issue junk bond. Okay, so much of the, much of the credit of this innovation is giving to a firm called Drexel Berman Lambert and especially its trader, a guy named Michael Milken. And if you have time, I suggest you Google him, or YouTube him and to learn a little bit more about him. So firm not able to master an investment grade, we're happy to go to Drexel. And what they did is they raised money for them through those junk bonds. So right from the get go, your bond was speculative. Okay, so eventually what happened, high yield bond, they were very famous in the 1980s. And they were used to finance leverage buyout and hostile takeover between companies. But what happened eventually Drexel, the firm and Michael Milken, they get, they went into trouble. They get into trouble on Wall Street from an insider trading scandals. And the junk, the junk bond market was kind of, they were associated with that market. So when they went to jail, kind of lost a little bit of steam that it came back later. But I suggest, if you're interested in this, just YouTube or watch a documentary about this topic, it's very interesting and interesting personality Michael Milken. But it's beyond the scope of this recording, but you could check him out yourself. So how do, how do rating agencies determine whether a bond is a AAA, AA or triple C? Well, they look at, they look at certain financial indicators. What are those some of those financial indicators? Now we're going to look at few. It doesn't mean those are the only one, but those are important ones. First, they look at that with something called the coverage ratio. And we're going to learn about those later on. When we look at our financial statement analysis, we look at these ratios, but we're going to cover them briefly here. It's the ratio of companies earnings to fixed assets. So how much earnings do you have in comparison to your fixed asset, to your fixed cost? Usually what is your fixed cost? Like the main thing in your fixed cost is interest because interest is a fixed cost. So how much are you earning comparing to your fixed cost? One specific example will be something called the times interest earned. And basically what that is, they will take your interest, your income before interest and taxes. So they will take the ratio of your income, your earnings before interest and taxes. So E, B, I, T, your earnings, E for earnings. So your income before interest and taxes, and you'll divide this by your interest expense, by I. So let's assume you have earnings of $10 and your interest expense is two. It means we say your coverage is five. Now, if another company has an earning of 20 and interest of two, their coverage is 10. It means they can cover their interest expense 10 times. You can cover your interest expense five times. So obviously, the higher this ratio, the better off you are. Low or falling coverage ratio, signal possible cash flow difficulties. Now, that's not the only coverage ratio, but that's one of the most famous one, your earnings before interest and taxes. Also, they could look at something called the leverage ratio and there are a lot of leverage ratio, but we're going to be looking at debt to equity. Now, let's see what this is. A high leverage ratio indicate excessive indebtness, raising the possibility of the firm will enable to earn enough to satisfy its obligation. And this ratio is very easy to explain because as it treats, debt to equity. So take your debt. So if you have debt of 30 and you have equity of 10, which is, let's see, 30 divided by 10 is three. This is your debt to equity. What does that mean? If we have debt of 30 and equity of 10 as an accountant assets equal to your debt plus your equity, it means you have assets of $40, of which $30 coming from that and $10 coming from equity. It means you are highly leverage. So for every dollar, the investors bring in, you are using $3 from the lenders. Yeah, investors would love this. They're risking $1. The debt holders are risking $3. So if you have high debt to equity ratio, you are simply a risky company because what's happening is you are using the lenders money. So the shareholders, they're putting $1. You're bringing $3 from the bondholders or from the bank or from the lenders. It's a very risky endeavor. And think about it. If you are a stockholder, if you own this company, the maximum you would lose is $1. They would use $3. So you are highly leverage. You may take excessive risk. So it's a high risk endeavor. Another type of ratio, again, we'll talk about those ratios later on. This is just kind of to tell you what indicators they look at. They look at liquidity ratios. What is liquidity ratios? The two most common ones. It's the one that you learn first two ratios are the current ratio and it's cousin, the quick ratio. And basically what is the current ratio? Taking your current assets, dividing your current assets by your current liabilities. So if you have current assets of 20, current liabilities of 10, we say the ratio of two. It means for every dollar in current liabilities, you are covered $2 in current assets. Now you want this to be as high as possible, but you don't want it to be too high because you don't want your assets to be tied into current liabilities because current liabilities don't earn a lot. Like if you have cash in the bank, cash don't earn you a lot of money. The related or its cousin, the quick ratio, basically the quick ratio is taking your current assets, executing inventory and specifically not only executing inventory, you've had to exclude accounts like supplies, prepaid, small, small current assets. Basically what you keep is your cash. When it comes to the coverage, the quick ratio, you'd only use cash, investments, short-term investments and account receivable and you'll divide those by current liabilities. Basically, it's similar to this one except you will take the inventory out. Simply put, what you are saying is, let's assume my inventory is useless. Can I still pay off my liabilities? That's what you're saying. So obviously, always, always, always the quick ratio for any particular company is lower than the lower than the quick ratio is lower than the current ratio because remember what you're doing is you are removing from the $20, but you are not removing from the $10. So you are removing numbers from the numerator, which is current assets, but not from the denominator. Another, again, I'm going to say, I don't want to keep repeating this, but we'll talk about those later. Profitability ratios measures the rate of return on your assets or equity. So simply put, how much money are you earning in relationship to your assets? How much money are you earning in relationship to the equity to the shareholders? The profitability ratio is an indicator of the company's overall performance. Of course, you want the profitability ratio to be high. You want to be making a profit to be a good company. If you're making a profit, guess what? Then you can pay off your debt. If you can pay off your debt, we're going to give you a good credit rating. Just like if you have a job, you're paying off your debt, you're going to have a better credit score. So return on asset, which is earnings before interest and taxes divided by total asset and we'll explain later why it's earning before interest and taxes and return on equity. Same thing, you'll take in that income dividing by equity. Those are two, the two most popular measures. There are other profitability ratios, but those are the two most popular measure terms with higher return on asset or equity should be able to better raise money in security market before they, before the offer prospect for better return on the firm investment.  The lenders are not worried about your credit risk. So they are willing to lend you the money and they're willing to lend you the money at a lower, at a lower interest cost and cash flow to that ratio. I believe that's the most accurate or the best one to cover to not to cover to look at is looking at your cash flow to that. So tell me how much cash do you have to cover your debt? I mean, all the others are good, but at the end of the day, you pay your debt with cash. So what is your cash flow in relationship to your debt ratios? I want to see that. So those are five important indicators and here they, you know, here, for example, you can, you can see them side by side. For example, here, they're, they're, they're looking at earning before interest and taxes divided by total assets and for a triple A company, it's 20.9. For example, for double A company, it's 15.6. So you want this ratio to be high here, the profitability notice the triple A, they have, they have good asset coverage. They have good, good profit margin ratio. They have a good interest coverage multiple EBIT to interest coverage debt to earnings before interest and taxes multiple. They're all high debt to debt to equity. You don't want it to be high. So this is low, which is good. You want it to be low. The others high funds from operation to total that. So this is high as well. So notice retained cash flow in relationship to your to your debt. This is high. So notice if you compare those triple A figures for these ratios to these, as your financial situation deteriorated, guess what? Then your credit rating will go down. For example, if you're operating margin, operating profit margin, you're only making 8.9. Well, you're not going to be graded as triple A because the triple A company is making profit for every dollar in sales. They're making 22% in profit here. Triple A, their debt to equity is only 19% here. Your debt to equity is 72. And here for C, practically dollar for a dollar, for every dollar in debt, for every dollar in equity, you have a dollar in debt. So this is how, in other words, this is how or this is what those S&P and Moody's look at when they evaluate the credit ratings of the companies. They look at ratios like these. Let's look at more terms that deals with bonds and credit rating. One of them is indenture. And basically, what is an indenture? Simply put, it's a contract between the bondholder and the issuer. Why? Because if something happens, you need to spell out, we need to find out who's going to be paid first and how and if there's any collateral. So the bond indenture, it will spell out, it will spell out the specific conditions between the bondholder and the lender because things will happen. And sometime you'd have two bondholders. Who's going to get their money first? Well, we're going to deal with that shortly. But this is why you have to spell out what are the, what is the contract? What does the contract says? We have something called the sinking fund. It's a bond indenture that calls for the issuer to periodically repurchase some proportion of the outstanding bonds prior to maturity. And basically, a bond indenture, basically it's a contract, the sinking fund, it's part of the indenture. It basically, what it's saying, it's saying, look, don't wait until all the bonds mature all at once. You might have to come up with a lot of money. Why don't you create a sinking fund? What is a sinking fund? Put some money away in a fund, let it sink. In other words, put it away from everything else and start to buy those bonds periodically. So the firm will, will, may repurchase a fraction of the outstanding bonds in the open market each year. Why? So they don't have to pay all the bonds all at once when they come mature. So the firm have the option to purchase the bonds at either at the market price or sometimes they have a sinking fund price. If there is a sinking fund price, obviously you will buy it based on the lower of the two. So to allocate the burden of the sinking fund called fairly among bondholder, the, the bonds chosen for the court are selected at random based on serial number. So because which bond are you buying? Well, you would randomly select them because think about it. Some people want, you know, to redeem their bonds. So they'll be happy to give you back the bond and give them back their money. But the sinking fund bond differ from, you remember we talked about the callable bond, differ between, between the callable bond in two different ways. The firm can repurchase only a fraction of the bond, not everything. Sometime they allow them to double in some contract, they would say we might be able to buy 10% and under certain circumstances by 20% of the bond. That's first thing. So you cannot buy everything. Also, callable bond, when you have a callable bond, the callable bond has a premium cost. In other words, the company will pay more than the par value for the bondholder. The sinking fund bond, usually they're set at par value. They're going to give you exactly what the par value is. Let's take a look at additional terms that are relevant to bond rating, a subordinated or further debt. What does that mean? Now think about it. One of the factors that determine the credit riskiness of the company is how much debt you have because the more debt you have, the worse off you are, if you think about it. Now what's going to happen is to prevent firms from harming bondholders, subordination clauses to restrict the amount of their additional borrowing. So they would say, okay, if you want to borrow more, they would say, okay, you can borrow more. But if in case anything happened, we are paid first. Okay. So additional debt might be subordinated in priority to existing that. So they would say, okay, if you want to borrow, I would let you borrow. They will put that in the indenture, but if something happened, we get paid first. So in the event of a bankruptcy, subordinated or junior debt holder will not be paid unless the senior debt holder is paid in fold. And this makes sense. I want to protect myself. I gave you the money first. Therefore, I have a priority in case something happened. Also, bondholder to protect themselves, they might put what's called dividend restriction in the covenant. Okay. So those are covenant, limiting dividend, protect bondholder because they forced the firm to retain assets rather than pay them out to stockholders. Now think about it. Think about it from the stockholders perspective. The stockholders, they want you to pay every single penny out and profit in dividend because that's their company. The bondholders on the contrary, they don't want you to pay anything out in dividend because they want to keep the money.  So a typical restriction with this allow bond payment of dividend if cumulative dividend paid since the firm inception exceeds cumulative retained earning plus the proceeds of the sales of the stocks. So they will put something like this. And this is just an example of a restriction. Well, once you paid, once you have paid dividend equal to the profit, you know, it equal to the cumulative retained earning, which is the cumulative, the cumulative profit over the years, plus the sale of the stocks simply put once you distributed all your profit and you distributed enough dividend to cover the sale of the stock. We don't want you to pay dividend anymore. Also, a bondholder might have might request collateral. So some bonds are issued with specific collateral behind them. For example, well, in case you could not pay me, you have to sell your building or you have to sell your warehouse or you have to sell part of your inventory. That is a collateral. It's a particular asset that's pledged against that bond. And obviously, if you have a collateral as a bondholder, you are better off because if something happened, you will be paid. Okay? Sometimes they're called mortgage bond, collateral or mortgage bond in contrast to the venture. What are the venture? Guess what? You're really in big trouble when you have an adventure as a bondholder because you are not backed by any specific collateral. So when you give them the money and they say this is a venture bond, guess what? It means you have no protection whatsoever. So good luck if something happened. You have no assets to back up to to to back up the bond. Let's talk about yield to maturity and the fault risk. So obviously, the fault risk means what? You know, corporation might be subject to the fault. It means at some point, they may not pay you the money. So we must distinguish. So when you buy a bond between the bond promised yield to maturity, and it's expected yield, those are two different things yield to maturity and expected and expected yield. The promise or the stated yield will be realized. Simply put, if they're promising 8%, well, you're going to earn 8% if the firm meet the obligation of the bond. Simply put, if they promise you 8%, that's the maximum you will earn if they pay you the bond because this is how much you earn. Now, this is the promise or the stated yield, which is technically is based on the coupon. The expected yield to maturity, this is expected. Notice, this is what you are promised based on the stated yield. This is the expected. The expected is must take into account the possibility of a default. What does that mean? It means, well, guess what? You may not get your money at the end of the day. So what is your yield? What's your expected yield under those circumstances? Let's work an example to show you how this worked. So for example, at the height of the financial crisis in October 2008, I still remember that very vividly here. Ford Motor Company struggled and it's 6.625 coupon. So they have a coupon and it's being 6.625. Okay. And it's due in 2028 and they were rated triple C, which is a very low credit rating. And they were selling about 33% of par value. It means they were selling at a discount. And if you bought those bond, if you bought those bond at 33% discount of their value, you would have your yield to maturity, which is 20%. This is excellent. Here's the trick. When the yield is too high, why is the yield too high? The yield is too high because the bond is discounted. So they're paying 6.625. That's a high coupon. It's not only a high coupon. The bond went down in price. The bond went down in price. Therefore, you would earn 20%. But the problem with these bonds is what a Ford Motor Company is not an existence in 2028 when they become due. Now, luckily, Ford did survive. And the reason why Ford survived, that's a different story because right before the financial crisis, not because the CEO was smart, just they happened to have to refinance everything and they have cash on hand. Therefore, they survived the financial crisis in contrast to GM. But if you bought those bonds, well, although they promise 6.625, your actual, your expected would have been 20%, which is a great deal, a great deal. So bonds become more subject to the fault risk when the price is fault. So you have to be very careful when you're looking at a bond and the bond has a high yield. The reason why you would have a high yield is because there's a good chance that the bond is down in price. The reason it's down in price, because it's not credit worthy. So you have to be very careful with those bonds. So suppose a firm issued a 9% coupon bond for 20 years. And let's assume the bond had 10 years left until it matured. But the bond is having some financial difficulties. Well, near the investors believe that the firm will be able to make good on the remaining interest payment. But at maturity, it will be forced into bankruptcy and the bondholder would receive only 20%. So I'm sorry, not 20%, they would receive 70%. So the bond right now is selling at $750. So rather than 1000, basically it's discounted to $750. Now yield to maturity, that's going to change. That's going to change. So here's what's going to happen. It pays 9% coupon. It means $45 payment. The remaining life is 20 years and 20 years. The stated yield to maturity, we have to use $1,000 because that's what it's stated. And the price right now is $750. Now we have to compute i. So if we compute i, the stated yield to maturity, which is based on the promised payment, is $13.7. Based on the expected payment, which is here, expected YTM, only you would yield 11.6%. So the stated yield here is greater than the yield investors actually expect to earn. So if we look at the numbers, basically what you have to do, just go to the financial calculator and input the payment, PMT equal to 45, the number of payment and equal to 20. The final payment is the future value and the price is PV negative $750 and compute i and it's going to give you the yield. It's going to give you the yield. Suppose the condition of the firm deteriorate further and the investor now believes the company will pay only 55%. So simply put what you do as you take this price and now you're getting only $550, 55%. If we compute this, now the stated yield to maturity based on the promised cash payment is 15.2. While the expected yield to maturity increased by 0.04, the trap and price caused the promised yield and the default premium to rise by 1.5%. Very, very interesting. Let's take a look at the default premium. To compensate for the possibility of default, corporate bond must offer a default premium. And what is the default premium? That's the difference between the yield on the corporate bond and the yield of otherwise risk-free or identical government that's riskless in terms of default. So if I want to buy a corporate bond, well guess what? I want to make sure I'm going to be earning more than what I would pay for the U.S. Treasury or Treasury bond. Why? Because the Treasury bond has zero interest, it has zero credit risk. If I'm going to be buying your bond, I need to be compensated. That extra compensation is the default premium. In case something happened, I want to be compensated. So if the firm remains solvent and actually pay the investors all the promised cash, guess what? I'm going to get a higher return than if I put my money with the government because I am taking a higher risk. Well, if however the firm goes bankrupt, the corporate bond is likely to provide a lower return than the government.  So the corporate bond has the potential for both a better or worse performance than a default free Treasury bond. Of course, when you lend money, you are taking risk. It's not as risky as buying stocks, but it's riskier than the Treasury bond, the government giving your money to the government. So in other words, it's riskier. Of course, it is. Of course, it is. Uncle Sam is the safest. Well, we can say that so far. So hopefully, let's hope we will stay. It will stay that way. Otherwise, we'll have an arm again. We'll have a big problem. Who knows? So also, we have something called the risk structure of interest rate. It is the pattern of the fault premium offered on risky bond. This is called the risk structure of interest rate. And what happened is this, the greater the default risk, the higher the default premium. Of course, let's take a look at those different types of bond, high yield bond, triple B bond and triple A bond. So it notes the triple A bond, the yield from the 70s, it doesn't differ that. So they don't have to pay a lot of risk premium. Why? Because they're already notice, they're already close to zero. So they don't go that far. But if we're looking at the high yield bond, high yield bond, when the situation deteriorate, when the economic, when we have an economic problems to buy those bonds, you're going to have to pay, they're going to have to offer a premium for the investors to buy them. So notice the yield spread is very, very high. Why? Because they are riskier. They are riskier. Credit default swaps or CDS, those are a form of insurance policy on the default risk of a bond or a loan. So what you do is you buy them. So if you have a bond, you buy them, you'd say, okay, in case something happened to my bond, someone will pay me. So if you want to invest in AT&T bonds, and you invest in AT&T bond, and what you do at the same time, you buy insurance from someone else, from a bank, from an investment company, and they would agree, and you'll pay them a premium just like any insurance, we call credit default swap.  So the annual premium, and you can buy this on bonds, government bond or sovereign bond, which is government or corporate. So the annual premium in early 2010 on a five years sovereign Greek bond was about 3%, meaning if you have a bond principle of $100, you have to pay $3. That's little bit expensive. So the CDS seller collect the annual payment for the term of the contract, but must compensate the buyer for the loss of the bond value in the event of a default. Now a lot of companies did not think they were taking a big risk when they sold those credit default swap into 2008 financial crisis because they never thought that those bonds would collapse, but those bonds eventually collapse. So CDC contract on corporate as well as they're available for sovereign debt. And back then, they did not have credit default swaps on mortgage backed securities. So if you watch the big short, or if you read the book, they went to the investment bank and they tried to convince them to write those credit default swaps. While CDC were conceived as a form of bond insurance, that's the original purpose of them. It wasn't long before investors realized they could use them as speculative. So simply put what you're doing is like you're buying fire insurance on your neighbor's house. That's basically what they are, because if something happened to your neighbor's house, if something happened to the bond, you will be paid. That's basically how it works. So if we look at John Paulson, who predicted the imminent financial crisis, purchased those CDS contract on mortgage bonds and actually they did not exist yet to convince investments, banks and banks to sell them those, as well as debt of financial firms that would have profit as their CDC prices spiked in September, right before the crisis.  He got 3.7 billion by doing this bet. This is, you know, again, watch the big short or read the book. In the next topic, we would look at yield curve. Again, I would like to invite you to like this recording, share it and don't forget to visit my website farhatlectures.com for additional resources for this course and other courses. Good luck, study hard and stay safe.