{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

FINECONCLASS

# FINECONCLASS - 1 1 Financial Economics Concepts ย Time...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1 1 Financial Economics Concepts ยก Time Value of Money ยข Compounding ยข Discounting ยก Risk/return/diversification ยก Stock Price, Efficient markets and random walks ยก Insurance basics ยก Behavioral Issues ยก Punch lines rather than depth 2 In the News? 3 Course Issues ยข Extra credit ยข Investment Game ยข Advise 3 ยข Tutoring/ LRC/ Helping Yourself ยข FINAL EXAM ยข Wikis ยข Clicker Points 2 4 Compound growth and rule of 72/70/69 ยก Compound Growth ex: ยข \$100x(1+.1) =110 ยข \$100x(1+.1)(1+.1)=121 ยข \$100x(1+.1) 2 =121 ยข-> FV = PV (1+i) n = PVei n ยก Where did extra \$1 come from ยก โThe most powerful force in the universe is compound interest โ. Albert Einstein ยก What About inflation? inom=ireal+exp infl ยก 2PV=PV(1+i) n -> 2= (1+i) n -> ln2=nln(1+i)-> ยข 69/n=I (ln(1+i) approx i, mult by 100 5 Why/how do we discount future values? ยข Present Discounted Value ยข Why? (i=r=interest rate) ยก Interest - not inflation, but linked ยข I nominal = ireal + expected inflation ยก Dis-count some of future stream ยข Amt could earn in interest...
View Full Document

{[ snackBarMessage ]}

### Page1 / 5

FINECONCLASS - 1 1 Financial Economics Concepts ย Time...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online