Chapter 14 - The Basic Tools of Finance
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Last updated 8:04 PM on 4/13/22
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8 Terms
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Random walk
________ - the path of a variable whose changes are impossible to predict.
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Firm-specific risk
________ - the risk that affects only a single company.
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Fundamental analysis
________- The study of a companys accounting statements and future prospects to determine its value.
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Finance
________- the field that studies how people make decisions regarding the allocation of resources over time and the handling of risk.
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Risk aversion
________- A dislike of uncertainty.
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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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Efficient markets hypothesis
________- The theory that asset prices reflect all publicly available information about the value of an asset.
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Diversification
________- The reduction of risk achieved by replacing a single risk with a large number of smaller, unrelated risks.
Flashcards (24)