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Financial Markets: Chapter 4
Terms in this set (10)
An economy in which households, firms, and governments do not borrow or lend internationally.
The division of wealth among many different assets to reduce risk.
The rate of return expected on an asset during a future period.
The assertion by Irving Fisher that the nominal interest rises or falls point-for-point with changes in the expected inflation rate.
Idiosyncratic (or unsystematic) Risk
Risk that pertains to a particular asset rather than to the market as a whole, as when the price of a particular firm's stock fluctuates because of the success or failure of a new product.
Large Open Economy
An economy in which changes in the demand and supply for loanable funds are large enough to affect the world real interest rate.
Market (or systematic) Risk
Risk that is common to all assets of a certain type, such as the increases and decreases in stocks resulting from the business cycle.
An economy in which households, firms, and governments borrow and lend internationally.
The degree of uncertainty in the return on an asset.
Small Open Economy
An economy in which the quantity of loanable funds supplied or demanded is too small to affect the world real interest rate.
THIS SET IS OFTEN IN FOLDERS WITH...
Financial Markets: Chapter 1
Financial Markets: Chapter 2
Financial Markets: Chapter 3
Financial Markets: Chapter 5
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