Macroeconomics ch 27

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Macroeconomics ch 27
2011-11-18 00:07:21
Macroeconomics 27

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  1. Finance
    The field that studies how people make deciosions regarding the allocation of resources over time and the handling of risk.
  2. Present Value
    The amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money
  3. Future Value
    The amount of money in the future that an amount of money today will yield, given prevailing interest rates.
  4. 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.
  5. Risk Aversion
    A dislike of uncertainty.
  6. Diversification
    The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.
  7. Firm-specific risk
    Risk that affects only a single company.
  8. Market Risk
    Risk that affects all companies in the stock market.
  9. fundamental Analysis
    The study of a company's accounting statements and future prospects to determine its value.
  10. Efficient Markets Hypothesis
    The theory that asset prices reflect all publicly available information about the value of an asset.
  11. Informational Effeciency
    The description of asset prices that rationally reflect all available information.
  12. Random Walk
    The path of a variable whose canges are impossible to predict.