ECO 2013 Study Guide - Final Guide: Efficient-Market Hypothesis, Mutual Fund, Opportunity Cost
Document Summary
The higher the risk, the higher the potential return of any money you invest. The lower the risk, the lower the potential return. Some stocks give voting rights, some stocks pay dividends. "iou" promises to pay back a loan w/ interest. Asset prices change quickly to reflect new information you cannot find patterns in data w/out eliminating them. only randomness is left. Index funds and diversity mutual fund with a portfolio to match or track components of a market index. Simple trade: exchange of goods and services, trade creates value because it channels goods/services to those who value them the most. There are not always enough resources, so people must engage in trading: trade offs- the decision that weighs one thing against another. Production possibilities frontier a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology.
