CH.9 ECONOMICS

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Anonymous
ID:
9220
Filename:
CH.9 ECONOMICS
Updated:
2010-03-05 10:04:52
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ECONOMICS CH 9
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DEFINITIONS FOR CHAPTER 9 MACROECONOMICS IN MANKIW
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  1. FINANCE
    THE FIELD THAT STUDIES HOW PEOPLE MAKE DECISIONS 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 THE PREVAILING INTEREST RATES TO PRODUCE A GIVEN FUTURE AMOUNT OF MONEY
  3. FUTURE VAUE
    THE AMONT OF MONEY IN THE FUTURE THAT AN AMOUNT OF MONEY TODAY WILL YIELD, GIVEN PREVAILING INTEREST RATES
  4. COMPOUNDING
    THE ACCUMULATION OF A SUM OF MONEY IN, SAY, A BANK ACCOUNT TO EARN ADDITIONAL INTEREST IN THE FUTURE
  5. COMPOUNDING FORMULA
    (1+R)^N x 100
  6. R
    INTEREST RATE
  7. N
    NUMBER OF YEARS
  8. DISCOUNTING
    FINDING A PRESENT VALUE OF A FUTURE SUM OF MONEY
  9. DISCOUNTING FORMULA
    X/(1+R)^N
  10. RISK AVERSION
    A DISLIKE OF UNCERTAINITY
  11. DIVERSIFICATION
    THE REDUCTION OF RISK ACHIEVED BY REPLACING A SINGLE RISK WITH A LARGE NUMBER OF SMALLER, UNRELATED RISKS
  12. FIRM-SPECIFIC RISK
    THE RISK THAT AFFECTS ONLY A SINGLE COMPANY
  13. MARKET RISK
    RISK THAT AFFECTS ALL COMPANIES IN THE STOCK MARKET
  14. FUNDAMENTAL ANALYSIS
    THE STUDY OF A COMPANY'S ACCOUNTING STATEMENTS AND FUTURE PROSPECTS TO DETERMINE ITS VALUE
  15. EFFICIENT MARKETS HYPOTHESIS
    THE THEORY THAT ASSET PRICES REFLECT ALL PUBLICLY AVAILABLE INFORMATION ABOUT THE VALUE OF AN ASSET
  16. INFORMATIONAL EFFICIENCY
    THE DESCRIPTION OF ASSET PRICES THAT RATIONALLY REFLECT ALL AVAILABLE INFORMATION
  17. RANDOM WALK
    THE PATH OF A VARIABLE WHOSE CHANGES ARE IMPOSSIBLE TO PREDICT

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