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Unformatted text preview: • Selling off of assets o Stocks: I.e. share, equities Shareholders receive share of company profits • Securities valuation: o Time Value of Money o Can value any security and any asset o Money today worth more than money tomorrow Price inflation risk Default risk Opportunity cost of foregoing consumption today o Real Rate of Return: Accounts for opportunity cost and default risk o Nominal Rate of Return: Real rate + inflation o Simple vs. compound interest: Can compound annually, monthly, etc....
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