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4 Written questions

4 Multiple choice questions

  1. the field that studies how people make decisions regarding the allocation of resources over time and the handling of risk
  2. the amount of money in the future that an amount of money today will yield, given prevailing interest rates x/(1-r)^n
  3. the path of a variable whose changes are impossible to predict
  4. the amount of money today that would be needed using prevailing interesting rates to produce a given future amount of money (1+r)^n = 100

4 True/False questions

  1. diversificationthe reduction risk achieved by replacing a single risk with a large number of smaller, unrelated risks


  2. fundamental analysisthe study of a company's accounting statements and future prospects to determine its value


  3. informational efficiencythe description of asset prices that rationally reflect all available information


  4. compoundingthe accumulation of a sum of money in, say, a bank account, where the interest earned remains in the account to earn additional interest in the future