macro econ

  1. Present Value
    the amount of money today that would be needed using prevailing interest rates to produce a future given amount of money
  2. risk aversion
    a dislike of uncertainty
  3. utility function
    shows how utility a subjective measure of satisfaction depends on wealth, as wealth rises utility function becomes flatter, reflecting property of diminishing marginal utility
  4. firm specific risk
    risk that affects single/specific company
  5. market risk
    risk that affects all companies in the stock market
  6. standard deviation
    volitility of a variable; how much variable is likely to fluctuate
  7. efficient market hypothesis
    the theory that asset prices reflect all publicly available information about value of an asset
  8. fundamental analysis
    the study of a company's accounting statements and future prospects to determine it's value
  9. random walk theory
    the path of a variable whose changes are impossible to predict
  10. EFT vs managed funds
    in 10 years ending July 2005 80% of mutual stock funds failed to beat the S&P 500 index fund
  11. Present value technique
    • (1xr)xN
    • (1xr)*xN
  12. Rule of 70
    70/percentage points in growth equals years for income to double
Card Set
macro econ
Tools of Finance