ECON 112 Lecture Notes - Lecture 14: Risk Aversion, Adverse Selection, Mutual Fund
2 Nov 2015
School
Department
Course
Professor
Document Summary
The basic tools of finance. Studies how people make decisions: Allocation of resources over time. To produce a given future amount of money. It takes 70 years for variable to double at an interest rate of x. It doubles in 70/x years b. c. d. e. f. g. i. i. ii. iii. i. i. ii. i. ii. i. ii. iii. iv. v. Amount of money in the future. That an amount of money today will yield. Accumulation of a sum of money. Interest earned remains in the account. To earn additional interest in the future. Future value = (1 + r)^n x pv. Present value = fv/(1 + r)^n. Pv = x(1 + r)^n g. Find present value for a future sum of sum. Bringing money from the future to today. X = amount to be received in n years (future value) Pv = x(1 + r)^n. Not necessarily to avoid it at any cost.
