Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
14 Cards in this Set
- Front
- Back
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.
|
|
diversification
|
The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.
|
|
efficient markets hypothesis
|
The theory that asset prices reflect all publicly available information about the value of an asset.
|
|
finance
|
The field that studies how people make decisions regarding the allocation of resources over time and the handling of risk.
|
|
firm-specific risk
|
Risk that affects only a single company.
|
|
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.
|
|
informational efficiency
|
The description of asset prices that rationally reflect all available information.
|
|
market risk
|
Risk that affects all companies in the stock market.
|
|
present value
|
The amount of money today that would be needed, using prevailing interest rates, to produce a given future amount of money.
|
|
random walk
|
The path of a variable whose changes are impossible to predict.
|
|
risk aversion
|
A dislike of uncertainty.
|
|
speculative bubble
|
the price of an asset rises above what appears to be its fundamental value
|
|
moral hazard
|
After people buy insurance, they have less incentive to be careful about their risky behavior because the insurance company will cover much of the resulting losses
|