on 26-Jun-2017 (Mon)

The temporal lobes, found on the outsides of each hemisphere (i.e., around the temples), contain the primary auditory cortex.

The temporal lobes rest on top of, and are connected to the limbic system (e.g., amygdala and hippocampus); thus the temporal lobes are also involved in emotional behavior and memory

The left temporal lobe is involved in verbal memory and language comprehension (Wernicke's area)

The right temporal lobe is involved in visual memory.

Temporal lobe damage may result in increased aggressive behavior, increased or decreased interest in sexual behavior, interference with memory, and problems understanding speech (Wernicke's aphasia).

The occipital lobes, located at the back of the brain, housethe primaryvisual cortex and are involved in sight, reading, and visual images.

Occipital lobe damage is not very common, but may result from a stroke or tumor.

Damage may lead to difficulty recognizing drawn objects, difficulty identifying colors, hallucinations and illusions, inability to recognize words (word blindness), and problems with reading or writing.

the subcortical brain areas that include the corpus callosum, the limbic system, and the basal ganglia

The corpus callosum is a bundle of nerve fibers that serves as a bridge between the left and right hemispheres,

The right hemisphere controls the left side of the body, and sensory experiences on the leftsideof the body (e.g., an object placed inthe left hand) are always processed by the right hemisphere. In contrast, the left hemisphere controls the right side of the body, and sensory experiences on the right side of the body (e.g., an image flashed in the right visual field) are always processed by the left hemisphere. This is true regardless of whether the person's corpus callosum is intact or severed.

split-brain patients

To better understand communication between the two hemispheres, experiments have been undertaken with split-brain patients. These patients have had their corpus callosum severed in an attempt to reduce severe epileptic seizures. With a severed corpus callosum, the right hemisphere still processes the experiences of the left side of the body, and vice-versa; however, information can no longer be shared with or transferred to the opposite hemisphere. In the classic study with split-brain patients, the word HEART was flashed in such a way that HE was seen in the left visual field only, and ART was seen in the right visual field only. Since HE was seen in the left visual field, it was processed by the right hemisphere. With a severed corpus callosum no communication could occur between the two hemispheres, thus patients were unable to verbalize the word (as there is no language in the right hemisphere). They were able to verbalize ART since it was flashed to the right visual fields and therefore directly registered in the left hemisphere, which controls language

The limbic system is largely involved in emotions (e.g., fear, anger, pleasure), basic drives (e.g., sex, hunger), learning, olfaction, and memory. The limbic system also influences our autonomic nervous system and endocrine system.

Key limbic system structures include the thalamus, hypothalamus, hippocampus, amygdala, and septum.

The limbic system, a set of brain structures that forms the inner border of the cortex, is considered our primitive brain and plays a key role in our survival

The thalamuslies belowthe corpuscallosum. It serves as the major sensory relay center for the brain, receiving input from all our senses except olfaction (smell).

The thalamus then integrates and processes this information before projecting it to the appropriate cortical areas. The thalamus is critical in the perception of pain. Abnormalities of the thalamus have also been linked to schizophrenia (e.g., misperceptions of sensory input).

Through its connections to the endocrine system (e.g., pituitary, thyroid, adrenal glands) and autonomic nervous system, the hypothalamus serves a major role in homeostasis, including regulating temperature, hunger, thirst, sex, cyclic sex hormone secretion (e.g., the menstrual cycle), aggression, and the sleep-wake cycle.

Withinthe hypothalamus, the group of cells called the suprachiasmic nucleus (SCN) is considered the body's circadian clockbecause it regulates the sleep-wake cycle.

The hypothalamus directly influences the pituitary gland by secreting hypothalamic releasing andhypothalamic inhibiting hormones (e.g., thyrotropin-releasing hormone, corticotropin-releasing hormone). In response to hypothalamic hormones the pituitary secretes its own hormones (e.g., growth hormone, thyroid stimulating hormone, adrenocorticotropic hormone) that activate the other endocrine glands (e.g., thyroid, pancreas)

The primary function of the hippocampus is memory, specifically the consolidation of conscious memories. The hippocampus stores new information and events as lasting memories.

The amygdala attaches emotional significance to sensory input; it is strongly implicated in fear (e.g., startle response), aggression, and emotional memory. The amygdala essentially controls the fear response, receiving and integrating sensory input to determine the level of threat. The amygdala is also involved in the memory of fear, and thus has been linked to PTSD.

Stimulating the amygdala increases aggression. When the amygdala is removed or destroyed, aggression is diminished. KIuver-Bucy syndrome was first described in monkeys thathad undergone bilateral temporal lobectomies with complete removal of the amygdala. Kluver-Bucy syndrome results in placidity, apathy, hypersexuality, hyperphagia (excessive eating), and agnosias (problems withrecognition)

The septum moderates or decreases aggression. Damage to the septum can result in septal rage syndrome

In other words, there is no fixed optimal lag—It depends on the targeted retention interval.

the expanding practice schedule yielded higher retention of foreign vocabu- lary over the extensive training period, suggesting that expanding practice may especially maintain knowledge over long periods of time

Although acquiring and retaining knowledge matters in education, a more crucial objective is transfer, the ability to utilize what was learned to answer new questions or solve new problems

some evidence indicates that spac- ing can enhance meaningful learning that generalizes to new situations

The basal ganglia are inhibitory. They generally function to put the brakes on movement, allowing us to be still and maintain posture. In order to move voluntarily, the brakes must then be released.

The basal ganglia play a vital rolein the regulation and coordination of movement and with establishing posture. In order to move smoothly, the cortical areas involved in control of movement (e.g., premotor cortex, primary motor cortex) must receive information from the basal ganglia. Without this information, the cortex is unable to properly direct motor control, and the deficits seen in movement-related disorders are evident.

The main nuclei of the basal ganglia include the caudate nucleus, putamen, substantia nigra, globus pallidus, and subthalamic nucleus

Dysfunction in the basal ganglia tends to result in one of two problems: the presence of extraneous unwanted movements (e.g., as seen in Huntington's), or difficulty with intended movement (e.g., as seen in Parkinson's).

Huntington's disease results from degeneration of the caudate nucleus and putamen, and produces continuous thrusting movements of the face and limbs.

Parkinson's disease results from a slow and steady loss of dopaminergic neurons in the substantia nigra, and results in tremor, rigidity, and bradykinesia (slowed movements).

Two other disorders related to the basalganglia abnormalities include Tourette's and OCD

the cerebellum provides excitatory inputs that are responsible for maintaining smooth movement and coordinating motor activity.

The cerebellum also controls the automatic adjustments of posture and muscle tone that result in our ability to maintain balance and equilibrium, and is involvedin motorlearning.

The hallmark of cerebellar disease is ataxia, defined as a lack of coordination of voluntary movements in the absence of weakness or sensory loss. Symptoms of cerebellar damage may appear as problems with posture, gait, incorrect timing in the

activation of muscles, disequilibrium, vertigo, inability to reach out and grab objects, difficulty makingrapid movements, orproblems coordinating fine movements.

Free Cash Flow to Equity (FCFE): Cash available to stockholders after payments to and inflows from bondholders. This is the cash flow from operations net of capital expenditures and debt payments (including both interest and repayment of principal).

FCFE = FCFF + Net borrowing - Int ( 1- Tax rate)

FCFE can be calculated from net income. Recall that FCFF = NI + NCC + Int (1 - Tax rate) - FCInv - WCInv. Then:

FCFE = NI + NCC + Net borrowing - FCInv - WCInv

FCFE can be calculated from CFO.

FCFE = CFO + Net borrowing - FCInv

This is different from the formula given in the textbook since net debt repayment should be included in net borrowing!

Cash Flow Ratios

The cash flow statement may also be used in financial ratios measuring a company's profitability, performance, and financial strength.

Performance Ratios

• Cash flow to revenue = CFO / Net revenue: cash generated per dollar of revenue.
• Cash return on assets = CFO / Average total assets: cash generated from all resources.
• Cash return on equity = CFO / average shareholders' equity: cash generated from owner resources.
• Cash to income = CFO / Operating income: cash-generating ability of operations.
• Cash flow per share = (CFO - Preferred dividends) / number of common shares outstanding: operating cash flow on a per-share basis.

Coverage Ratios

• Debt coverage = CFO / Total debt: financial risk and financial leverage.
• Interest coverage = (CFO + Interest Paid + Taxes paid) / Interest paid: ability to meet interest obligations.
• Reinvestment = CFO / Cash paid for long-term assets: ability to acquire assets with operating cash flows.
• Debt payment = CFO / Cash paid for long-term debt repayment: ability to pay debt with operating cash flows.
• Dividend payment: CFO / Dividends paid: ability to pay dividends with operating cash flows.
• Investing and financing: CFO / Cash outflows for investing and financing activities: ability to acquire assets, pay debts, and make distributions to owners.

The time value of money (TVM) refers to the fact that $1 today is worth more than $1 in the future. This is because the $1 today can be invested to earn interest immediately. The TVM reflects the relationship between present value, future value, time, and interest rate. The time value of money underlies rates of return, interest rates, required rates of return, discount rates, opportunity costs, inflation, and risk. It reflects the relationship between time, cash flow, and interest rate.

There are three ways to interpret interest rates:

• Required rate of return is the return required by investors or lenders to postpone their current consumption.
• Discount rate is the rate used to discount future cash flows to allow for the time value of money (that is, to bring a future value equivalent to present value).
• Opportunity cost is the most valuable alternative investors give up when they choose what to do with money.

In a certain world, the interest rate is called the risk-free rate. For investors preferring current to future consumption, the risk-free interest rate is the rate of compensation required to postpone current consumption. For example, the interest rate paid by T-bills is a risk-free rate of interest.

In an uncertain world, there are two factors that complicate interest rates:

• Inflation: When prices are expected to increase, lenders charge not only an opportunity cost for postponing consumption but also an inflation premium that takes into account the expected increase in prices. The nominal cost of money consists of the real rate (a pure rate of interest) and an inflation premium.

• Risk: Companies exhibit varying degrees of uncertainty concerning their ability to repay lenders. Lenders therefore charge interest rates that incorporate default risk. The return that borrowers pay thus comprises the nominal risk-free rate (real rate + an inflation premium) and a default risk premium.

Compounding is the process of accumulating interest over a period of time. A compounding period is the number of times per year that interest is paid. Continuous compounding occurs when the number of compounding periods becomes infinite; interest is added continuously.

Discounting is the calculation of the present value of some known future value. Discount rate is the rate used to calculate the present value of some future cash flow. Discounted cash flow is the present value of some future cash flow.

The nominal risk-free rate of return includes both the real risk-free rate of return and the expected rate of inflation. A decrease in expected inflation rate would decrease the nominal risk-free rate of return, but would have no effect on the real risk-free rate of return.

The maturity premium compensates investors for the increased sensitivity of the market value of debt to a change in market interest rates as maturity is extended, in general (holding all else equal). The difference between the interest rate on longer-maturity, liquid Treasury debt and that on short-term Treasury debt reflects a positive maturity premium for the longer-term debt (and possibly different inflation premiums as well).