Term

Definition
the field that studies financial decision making 


Term
present value PV = FV/(1 + r )N 

Definition
the amount that would be needed today to yield that future sum at prevailing interest rates. 


Term
Future Value FV = PV(1 + r )N 

Definition
the amount the sum will be worth at a given future date, when allowed to earn interest at the prevailing rate. 


Term

Definition
the accumulation of a sum of money where the interest earned on the sum earns additional interest 


Term

Definition
If a variable grows at a rate of x percent per year, that variable will double in about 70/x years 


Term

Definition


Term

Definition
reduces risk by replacing a single risk with a large number of smaller, unrelated risks. 


Term

Definition
affects only a single company 


Term

Definition
affects all companies in stock market 


Term

Definition
the study of a company’s accounting statements and future prospects to determine its value 


Term
Efficient Markets Hypothesis (EMH 

Definition
the theory that each asset price reflects all publicly available information about the value of the asset 


Term
informationally efficient 

Definition
Each stock price reflects all available information about the value of the company 


Term

Definition
A stock price only changes in response to new information (“news”) about the company’s value 


Term

Definition
a mutual fund that buys all the stocks in a given stock index 

