Investing
                           Purchase of assets with the goal of 
                                increasing future income
                           Focuses on wealth accumulation
                           Underlying investment decisions: the 
                                tradeoff between expected return and risk
                                   Expected return is not usually the same as 
                                       realized return
                                   Risk: the possibility that the realized return 
                                       will be different than the expected return
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                                                            9781442502000 / Berk/DeMarzo/Harford / Fundamentals of Corporate Finance / 1  edition
                          Rate of Return
                           Total return on investment expressed 
                                as a percentage of the amount of 
                                money invested
                                                                                   Amount 
                                           Total                                        of                                   Rate of 
                                         Return                                     Money                                    Return
                                                                                   Invested
                           Investments usually earn higher rates 
                                of return than savings tools
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                                                            9781442502000 / Berk/DeMarzo/Harford / Fundamentals of Corporate Finance / 1  edition
                          Risk
                           Risk- uncertainty regarding the 
                                outcome of a situation or event
                           Investment Risk- possibility that an 
                                investment will fail to pay the expected 
                                return or fail to pay a return at all
                           All investment tools carry some level of 
                                risk
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                                                            9781442502000 / Berk/DeMarzo/Harford / Fundamentals of Corporate Finance / 1  edition
                          Types of Investment Tools
                                                       Stocks                                       Bonds
                                                      Mutual                                         Index 
                                                        Funds                                       Funds
                                                          Real                                         Cash
                                                        Estate
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                                                            9781442502000 / Berk/DeMarzo/Harford / Fundamentals of Corporate Finance / 1  edition
                          Risk Return Tradeoff
                           Investors manage risk at a cost             
                                - lower expected returns (ER)
                           Any level of expected return and risk 
                                can be attained                                                                                   Stocks
                                                                                                  ER            Bonds
                                                                                                     Risk-free Rate
                                                                                                                                           Risk
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                                                            9781442502000 / Berk/DeMarzo/Harford / Fundamentals of Corporate Finance / 1  edition