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Nelson EducationHigher EducationPrinciples of Microeconomics, Fourth Canadian EditionStudent Resources | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chapter 22. The Basic Tools of Finance
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Aaggregate riskrisk that affects all economic actors at once
Ccompoundingthe accumulation 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
Ddiversificationthe reduction of risk achieved by replacing a single risk with a large number of smaller unrelated risks
Eefficient markets hypothesisthe theory that asset prices reflect all publicly available information about the value of an asset
Ffinancethe field that studies how people make decisions regarding the allocation of resources over time and the handling of risk fundamental analysis the study of a company's accounting statements and future prospects to determine its value future value the amount of money in the future that an amount of money today will yield, given prevailing interest rates
Iidiosyncratic riskrisk that affects only a single economic actor informationally efficient reflecting all available information in a rational way
Ppresent valuethe amount of money today that would be needed to produce, using prevailing interest rates, a given future amount of money
Rrandom walkthe path of a variable whose changes are impossible to predict risk averse exhibiting a dislike of uncertainty
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