TAILIEUCHUNG - Lecture Macroeconomics (19/e) - Chapter 17: Financial economics

After reading this chapter, you should be able to: Describe the idea of present value and explain why it is critical in making financial decisions; identify and distinguish between the most common financial investments: stocks, bonds, and mutual funds; discuss how investment returns compensate for being patient and for bearing risk; explain portfolio diversification and why it implies that investors can focus on nondiversifiable risk when evaluating an investment opportunity. | Financial Economics McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Investment Economic investment New additions or replacements to the capital stock Financial investment Broader than economic investment Buying or building an asset for financial gain New or old asset Financial or real asset LO1 Present Value Present day value of future returns or costs Compound interest Earn interest on the interest X dollars today=(1+i)tX dollars in t years $100 today at 8% is worth: $108 in one year $ in two years $ in three years LO1 Present Value Model Calculate what you should pay for an asset today Asset yields future payments Asset’s price should equal total present value of future payments The formula: dollars today = X dollars in t years X ( 1 + i)t LO1 Applications Take the money and run Lottery jackpot paid over a number of years Calculating the lump sum value Salary caps and deferred compensation Calculating

• Kinh tế học
• Lecture Macroeconomics
• Kinh tế vĩ mô
• Economic theory
• Financial economics
• Financial investment
• Economic investment
• Bài giảng Kinh tế vĩ mô
• Science of macroeconomics
• Data of macroeconomics
• Unemployment rate
• Inflation rate
• Principles of microeconomics
• Economic models
• Tools of microeconomics
• Microeconomic transactions
• Natural rate of unemployment
• Consumer price index
• National income
• Agriculture sector
• Agricultural policies
• Economic fluctuations
• Macroeconomic policy
• Business cycle theory