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7 Cards in this Set
- Front
- Back
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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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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 the prevailing interest rates |
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Compounding |
the 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 |
