CH.9 ECONOMICS

THE FIELD THAT STUDIES HOW PEOPLE MAKE DECISIONS REGARDING THE ALLOCATION OF RESOURCES OVER TIME AND THE HANDLING OF RISK

THE AMOUNT OF MONEY TODAY THAT WOULD BE NEEDED, USING THE PREVAILING INTEREST RATES TO PRODUCE A GIVEN FUTURE AMOUNT OF MONEY

THE AMONT OF MONEY IN THE FUTURE THAT AN AMOUNT OF MONEY TODAY WILL YIELD, GIVEN PREVAILING INTEREST RATES

THE ACCUMULATION OF A SUM OF MONEY IN, SAY, A BANK ACCOUNT TO EARN ADDITIONAL INTEREST IN THE FUTURE

(1+R)^N x 100

INTEREST RATE

NUMBER OF YEARS

FINDING A PRESENT VALUE OF A FUTURE SUM OF MONEY

X/(1+R)^N

A DISLIKE OF UNCERTAINITY

THE REDUCTION OF RISK ACHIEVED BY REPLACING A SINGLE RISK WITH A LARGE NUMBER OF SMALLER, UNRELATED RISKS

THE RISK THAT AFFECTS ONLY A SINGLE COMPANY

RISK THAT AFFECTS ALL COMPANIES IN THE STOCK MARKET

THE STUDY OF A COMPANY'S ACCOUNTING STATEMENTS AND FUTURE PROSPECTS TO DETERMINE ITS VALUE

THE THEORY THAT ASSET PRICES REFLECT ALL PUBLICLY AVAILABLE INFORMATION ABOUT THE VALUE OF AN ASSET

THE DESCRIPTION OF ASSET PRICES THAT RATIONALLY REFLECT ALL AVAILABLE INFORMATION

THE PATH OF A VARIABLE WHOSE CHANGES ARE IMPOSSIBLE TO PREDICT