Economics (McConnell), 18th Edition

Chapter 34: Financial Economics

IN THIS CHAPTER YOU WILL LEARN:

1. The idea of present value and why it is critical in making financial decisions.



2. About the most popular investments: stocks, bonds, and mutual funds.



3. How investment returns compensate for being patient and for bearing risk.



4. About portfolio diversification and why it implies that investors can focus on nondiversifiable risk when evaluating an investment opportunity.



5. Why higher levels of nondiversifiable risk are associated with higher rates of return.



6. Why even professionals have a hard time trying to "beat the market."