Finance Class Notes

Class 1:

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The barter system: trade

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Exchange rate (amount exchange)

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Double coincidence of wands (matching up with wants)

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Money = medium of exchange

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Must be divisible, must be portable, must be durable, recognisable, scarce

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Fiat currency -> government issued currency

• NOT backed up by gold

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Digital money -> credit and debit cards, in-game money as well

• Examples: Robux, koins, fishies, ect. 

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Decentralized -> no centralized authority/there's no one person or group of people that is specifically in charge

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Class 2:

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Inflation occurs in an economy when there is a total expansion of money

Once new money enters the economy, prices rise

Debasement: mixing the original material with cheaper ones

Hyperinflation: Prices skyrocket and money becomes worthless

Inflation -> secret tax

Stagflation 

Inflation is an incentive to invest

Credit Score: your reward for having good credit with a low interest rate

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Class 3:

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Investing: Gradually build your wealth

Rewarded for taking a risk

Risk and reward is not equal though

Bonds are loans given to the government or a company and they would give you interest

Index evaluates market performance

Bull market and Bear market

Bear: calm, dropping prices

Bull: aggression (when things are doing very well)

A way a cy os valued is by looking at their market cap (price per share x #of shares out standing)