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Finance
The field that studies how people make deciosions regarding the allocation of resources over time and the handling of risk.
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Present Value
The amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money
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Future Value
The amount of money in the future that an amount of money today will yield, given prevailing interest rates.
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Compounding
The accumilation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future.
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Risk Aversion
A dislike of uncertainty.
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Diversification
The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.
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Firm-specific risk
Risk that affects only a single company.
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Market Risk
Risk that affects all companies in the stock market.
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fundamental Analysis
The study of a company's accounting statements and future prospects to determine its value.
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Efficient Markets Hypothesis
The theory that asset prices reflect all publicly available information about the value of an asset.
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Informational Effeciency
The description of asset prices that rationally reflect all available information.
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Random Walk
The path of a variable whose canges are impossible to predict.
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