曼昆《经济学原理》(宏观经济学分册)英文原版PPT课件——27basic_tools.ppt

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1、Copyright 2004 South-Western27The Basic Tools of FinanceCopyright 2004 South-WesternFinance is the field that studies how people make decisions regarding the allocation of resources over time and the handling of risk.Copyright 2004 South-WesternPRESENT VALUE:MEASURING THE TIME VALUE OF MONEYPresent

2、value refers to the amount of money today that would be needed to produce,using prevailing interest rates,a given future amount of money.Copyright 2004 South-WesternPRESENT VALUE:MEASURING THE TIME VALUE OF MONEYThe concept of present value demonstrates the following:Receiving a given sum of money i

3、n the present is preferred to receiving the same sum in the future.In order to compare values at different points in time,compare their present values.Firms undertake investment projects if the present value of the project exceeds the cost.Copyright 2004 South-WesternPRESENT VALUE:MEASURING THE TIME

4、 VALUE OF MONEYIf r is the interest rate,then an amount X to be received in N years has present value of:X/(1+r)NCopyright 2004 South-WesternPRESENT VALUE:MEASURING THE TIME VALUE OF MONEY Future ValueThe amount of money in the future that an amount of money today will yield,given prevailing interes

5、t rates,is called the future value.Copyright 2004 South-WesternFYI:Rule of 70According to the rule of 70,if some variable grows at a rate of x percent per year,then that variable doubles in approximately 70/x years.Copyright 2004 South-WesternMANAGING RISKA person is said to be risk averse if she ex

6、hibits a dislike of uncertainty.Copyright 2004 South-WesternMANAGING RISKIndividuals can reduce risk choosing any of the following:Buy insuranceDiversifyAccept a lower return on their investmentsFigure 1 Risk AversionWealth0UtilityCurrentwealth$1,000gain$1,000lossUtility lossfrom losing$1,000Utility

7、 gainfrom winning$1,000Copyright2004 South-WesternCopyright 2004 South-WesternThe Markets for InsuranceOne way to deal with risk is to buy insurance.The general feature of insurance contracts is that a person facing a risk pays a fee to an insurance company,which in return agrees to accept all or pa

8、rt of the risk.Copyright 2004 South-WesternDiversification of Idiosyncratic RiskDiversification refers to the reduction of risk achieved by replacing a single risk with a large number of smaller unrelated risks.Copyright 2004 South-WesternDiversification of Idiosyncratic RiskIdiosyncratic risk is th

9、e risk that affects only a single person.The uncertainty associated with specific companies.Copyright 2004 South-WesternDiversification of Idiosyncratic RiskAggregate risk is the risk that affects all economic actors at once,the uncertainty associated with the entire economy.Diversification cannot r

10、emove aggregate risk.Figure 2 DiversificationNumber ofStocks inPortfolio49(More risk)(Less risk)20014 6 8102040Risk(standarddeviation ofportfolio return)AggregateriskIdiosyncraticrisk30Copyright2004 South-WesternCopyright 2004 South-WesternDiversification of Idiosyncratic RiskPeople can reduce risk

11、by accepting a lower rate of return.Figure 3 The Tradeoff between Risk and ReturnRisk(standarddeviation)051015208.33.1Return(percentper year)50%stocks25%stocksNostocks100%stocks75%stocksCopyright2004 South-WesternCopyright 2004 South-WesternASSET VALUATIONFundamental analysis is the study of a compa

12、nys accounting statements and future prospects to determine its value.Copyright 2004 South-WesternASSET VALUATIONPeople can employ fundamental analysis to try to determine if a stock is undervalued,overvalued,or fairly valued.The goal is to buy undervalued stock.Copyright 2004 South-WesternEfficient

13、 Markets HypothesisThe efficient markets hypothesis is the theory that asset prices reflect all publicly available information about the value of an asset.Copyright 2004 South-WesternEfficient Markets HypothesisA market is informationally efficient when it reflects all available information in a rat

14、ional way.If markets are efficient,the only thing an investor can do is to buy a diversified portfolioCopyright 2004 South-WesternCASE STUDY:Random Walks and Index FundsRandom walk refers to the path of a variable whose changes are impossible to predict.If markets are efficient,all stocks are fairly

15、 valued and no stock is more likely to appreciate than another.Thus stock prices follow a random walk.Copyright 2004 South-WesternSummaryBecause savings can earn interest,a sum of money today is more valuable than the same sum of money in the future.A person can compare sums from different times usi

16、ng the concept of present value.The present value of any future sum is the amount that would be needed today,given prevailing interest rates,to produce the future sum.Copyright 2004 South-WesternSummaryBecause of diminishing marginal utility,most people are risk averse.Risk-averse people can reduce

17、risk using insurance,through diversification,and by choosing a portfolio with lower risk and lower returns.The value of an asset,such as a share of stock,equals the present value of the cash flows the owner of the share will receive,including the stream of dividends and the final sale price.Copyrigh

18、t 2004 South-WesternSummaryAccording to the efficient markets hypothesis,financial markets process available information rationally,so a stock price always equals the best estimate of the value of the underlying business.Some economists question the efficient markets hypothesis,however,and believe that irrational psychological factors also influence asset prices.