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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.

Present Value
The amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money

Future Value
The amount of money in the future that an amount of money today will yield, given prevailing interest rates.

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.

Risk Aversion
A dislike of uncertainty.

Diversification
The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.

Firmspecific risk
Risk that affects only a single company.

Market Risk
Risk that affects all companies in the stock market.

fundamental Analysis
The study of a company's accounting statements and future prospects to determine its value.

Efficient Markets Hypothesis
The theory that asset prices reflect all publicly available information about the value of an asset.

Informational Effeciency
The description of asset prices that rationally reflect all available information.

Random Walk
The path of a variable whose canges are impossible to predict.

