on 05-Feb-2018 (Mon)

Annotation 149653307

#finance #inflation #inflation-derivatives #inflation-derivatives-barcap
The most regularly tra ded structure in the inflation-linke d swaps market, and particularly in the inter-dealer market, is the zer o coupon inflation swap. One counterparty agre es to pay the cumulative percentage increase in the price index over the tenor of the s wap (with some lag on the referenc e index, similar to cash securities) , and the other pays a comp ounded fixed rate. There ar e no exchanges until the maturity of the swap, or in other words it is a zero coupon transaction

pdf

cannot see any pdfs

Flashcard 1428918766860

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Question
When the tax is imposed, the demand curve shifts [...] by the tax per unit, t.
vertically downward

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
When the tax is imposed, the demand curve shifts vertically downward by the tax per unit, t. This shift results in a new equilibrium

Original toplevel document

3.13. Market Interference: The Negative Impact on Total Surplus
; Originally, the pre-tax equilibrium is where D and S intersect at (P*, Q*). Consumer surplus is given by triangle a plus rectangle b plus triangle c, and producer surplus consists of triangle f plus rectangle d plus triangle e. <span>When the tax is imposed, the demand curve shifts vertically downward by the tax per unit, t. This shift results in a new equilibrium at the intersection of S and D′. That new equilibrium price is received by sellers (P rec’d ). However, buyers now must pay an additional t per unit to government, resulting in a total

Flashcard 1435790871820

Tags
#cfa-level-1 #economics #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4
Question
Total revenue (TR)[...] or [...]
Price times quantity (P × Q),

the sum of individual units sold times their respective prices; ∑(Pi × Qi)

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Total revenue (TR)Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i )

Original toplevel document

3. ANALYSIS OF REVENUE, COSTS, AND PROFITS
umber of time periods). For example, average revenue is calculated by dividing total revenue by the number of items sold. To calculate a marginal term, take the change in the total and divide by the change in the quantity number. <span>Exhibit 3 shows a summary of the terminology and formulas pertaining to profit maximization, where profit is defined as total revenue minus total economic costs. Note that the definition of profit is the economic version, which recognizes that the implicit opportunity costs of equity capital, in addition to explicit accounting costs, are economic costs. The first main category consists of terms pertaining to the revenue side of the profit equation: total revenue, average revenue, and marginal revenue. Cost terms follow with an overview of the different types of costs—total, average, and marginal. Exhibit 3. Summary of Profit, Revenue, and Cost Terms Term Calculation Profit (Economic) profit Total revenue minus total economic cost; (TR – TC) Revenue Total revenue (TR) Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(P i × Q i ) Average revenue (AR) Total revenue divided by quantity; (TR ÷ Q) Marginal revenue (MR) Change in total revenue divided by change in quantity; (∆TR ÷ ∆Q) Costs Total fixed cost (TFC) Sum of all fixed expenses; here defined to include all opportunity costs Total variable cost (TVC) Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) Total costs (TC) Total fixed cost plus total variable cost; (TFC + TVC) Average fixed cost (AFC) Total fixed cost divided by quantity; (TFC ÷ Q) Average variable cost (AVC) Total variable cost divided by quantity; (TVC ÷ Q) Average total cost (ATC) Total cost divided by quantity; (TC ÷ Q) or (AFC + AVC) Marginal cost (MC) Change in total cost divided by change in quantity; (∆TC ÷ ∆Q) 3.1. Profit Maximization In free markets—and even in regulated market economies—profit maximization tends to promote economic welfare and a hig

Flashcard 1477072260364

Tags
#48-laws-of-power #law-3-conceal-your-intentions
Question
Do not give them the chance to sense what you are up to: Throw them off the scent by [...].
dragging red herrings across the path

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Do not give them the chance to sense what you are up to: Throw them off the scent by dragging red herrings across the path.

Original toplevel document (pdf)

cannot see any pdfs

Flashcard 1731649735948

Tags
#computer-science #mathematics
Question
a [...] form of a mathematical object is a standard way of presenting that object as a mathematical expression.
canonical, normal, or standard form

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics and computer science, a canonical, normal, or standard form of a mathematical object is a standard way of presenting that object as a mathematical expression.

Original toplevel document

Canonical form - Wikipedia
strings " madam curie " and " radium came " are given as C arrays. Each one is converted into a canonical form by sorting. Since both sorted strings literally agree, the original strings were anagrams of each other. <span>In mathematics and computer science, a canonical, normal, or standard form of a mathematical object is a standard way of presenting that object as a mathematical expression. The distinction between "canonical" and "normal" forms varies by subfield. In most fields, a canonical form specifies a unique representation for every object, while

Annotation 1741537021196

#lebesgue-integration
Riemann's definition of integral starts with the construction of a sequence of easily calculated areas that converge to the integral of a given function.

Lebesgue integration - Wikipedia
igor in mathematics in the nineteenth century, mathematicians attempted to put integral calculus on a firm foundation. The Riemann integral—proposed by Bernhard Riemann (1826–1866)—is a broadly successful attempt to provide such a foundation. <span>Riemann's definition starts with the construction of a sequence of easily calculated areas that converge to the integral of a given function. This definition is successful in the sense that it gives the expected answer for many already-solved problems, and gives useful results for many other problems. However, Riemann integ

Annotation 1741557992716

#lebesgue-integration
We say that the Lebesgue integral of the measurable function f exists, or is defined if at least one of and is finite:

Lebesgue integration - Wikipedia
| = f + + f − . {\displaystyle |f|=f^{+}+f^{-}.\quad } <span>We say that the Lebesgue integral of the measurable function f exists, or is defined if at least one of ∫ f + d μ {\displaystyle \int f^{+}\,\mathrm {d} \mu } and ∫ f − d μ {\displaystyle \int f^{-}\,\mathrm {d} \mu } is finite: min ( ∫ f +

Annotation 1741778455820

#linear-algebra
The formula for the dot product of the vectors is $$uv = \|u\| \|v \| \cos θ.$$

pdf

cannot see any pdfs

Annotation 1741785533708

#dot-product

if a and b are orthogonal, then the angle between them is 90° and

Dot product - Wikipedia
‖ cos ⁡ ( θ ) , {\displaystyle \mathbf {a} \cdot \mathbf {b} =\|\mathbf {a} \|\ \|\mathbf {b} \|\cos(\theta ),} where θ is the angle between a and b. In particular, <span>if a and b are orthogonal, then the angle between them is 90° and a ⋅ b = 0. {\displaystyle \mathbf {a} \cdot \mathbf {b} =0.} At the other extreme, if they are codirectional, then the angle between them is 0° and a ⋅ b

Annotation 1741833243916

#calculus
Calculus has two major branches,
1. differential calculus (concerning rates of change and slopes of curves),[2] and
2. integral calculus (concerning accumulation of quantities and the areas under and between curves).[3]
These two branches are related to each other by the fundamental theorem of calculus.

Calculus - Wikipedia
small pebble', used for counting and calculations, as on an abacus) [1] is the mathematical study of continuous change, in the same way that geometry is the study of shape and algebra is the study of generalizations of arithmetic operations. <span>It has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental theorem of calculus. Both branches make use of the fundamental notions of convergence of infinite sequences and infinite series to a well-defined limit. Generally, modern calculus is considered to have been

Annotation 1741835078924

#calculus-of-variations
Calculus of variations is a field of mathematical analysis that
1. uses variations, which are small changes in functions and functionals, to
2. find maxima and minima of functionals, which are mappings from a set of functions to the real numbers.
elementary calculus is about infinitesimally small changes in the values of functions without changes in the function itself, calculus of variations is about infinitesimally small changes in the function itself, which are called variations.

Calculus of variations - Wikipedia
l Line integral Surface integral Volume integral Jacobian Hessian matrix Specialized[hide] Fractional Malliavin Stochastic Variations Glossary of calculus[show] Glossary of calculus v t e <span>Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. [Note 1] Functionals are often expressed as definite integrals involving functions and their derivatives. Functions that maximize or minimize functionals may be found using the Euler–L

Flashcard 1742441417996

Tags
Question
Managers and shareholders may have different attitudes towards [...]
risk.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
person delegating authority, and the agent is the person to whom the authority is delegated. Agency theory offers a way to understand why managers do not always act in the best interests of stakeholders. <span>Managers and shareholders may have different goals. They may also have different attitudes towards risk. Information asymmetry. Managers almost always have more information than shareholders. Thus, it is difficult for shareholders to measure managers' performance or to hold

Original toplevel document

Subject 3. Principal-Agent and Other Relationships in Corporate Governance
Shareholder and Manager/Director Relationships Problems can arise in a business relationship when one person delegates decision-making authority to another. The principal is the person delegating authority, and the agent is the person to whom the authority is delegated. Agency theory offers a way to understand why managers do not always act in the best interests of stakeholders. Managers and shareholders may have different goals. They may also have different attitudes towards risk. Information asymmetry. Managers almost always have more information than shareholders. Thus, it is difficult for shareholders to measure managers' performance or to hold them accountable for their performance. Controlling and Minority Shareholder Relationships Ownership structure is one of the main dimensions of corporate governance. For firms with controllin

Annotation 1742524779788

 Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value.

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Annotation 1742535265548

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance

Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors.

Market Factors
Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position.

Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management.

Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders.

Non-Market Factors

These factors include the legal environment, the media, and the corporate governance industry itself.

Annotation 1742655589644

In portfolio management Fixed-income securities are a way by which investors can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations.

The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits.

Parent (intermediate) annotation

Open it
pal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares. <span>In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. Among the questions this reading addresses are the following: What set of features define a fixed-income security, and how do these features determine

Original toplevel document

Reading 50  Fixed-Income Securities: Defining Elements (Intro)
Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares. In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. Among the questions this reading addresses are the following: What set of features define a fixed-income security, and how do these features determine the scheduled cash flows? What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors? What are the common structures regarding the payment of interest and repayment of principal? What types of provisions may affect the disposal or redemption of fixed-income securities? Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1 The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Sectio

Annotation 1743833926924

Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role.

Parent (intermediate) annotation

Open it
ise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. <span>Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Annotation 1743837596940

In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value.

Parent (intermediate) annotation

Open it
Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. <span>In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. <span><body><html>

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Annotation 1743840480524

#has-images #investopedia

A staggered board of directors (also known as a classified board) is a board that is made up of different classes of directors. Usually, there are three classes, with each class serving for a different term length than the other. Elections for the directors of staggered boards usually happen on an annual basis. At each election, shareholders are asked to vote to fill whatever positions of the board are vacant, or up for re-election. Terms of service for elected directors vary, but one-, three- and five-year terms are common.

Information on corporate governance policies and board composition can be found in a public company's proxy statement. Generally, proponents of staggered boards sight two main advantages that staggered boards have over traditionally elected boards: board continuity and anti-takeover provisions - hostile acquirers have a difficult time gaining control of companies with staggered boards. Opponents of staggered boards, however, argue that they are less accountable to shareholders than annually elected boards and that staggering board terms tends to breed a fraternal atmosphere inside the boardroom that serves to protect the interests of management above those of shareholders. (To learn more, read Governance Pays, The Basics Of Corporate Structure and What Are Corporate Actions?)

What is a staggered board?

Annotation 1743844936972

#investopedia
A structure for a board of directors in which a portion of the directors serve for different term lengths, depending on their particular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee).

Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered.

Classified Board
DEFINITION of 'Classified Board' <span>A structure for a board of directors in which a portion of the directors serve for different term lengths, depending on their particular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee). Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered. BREAKING DOWN 'Classified Board' The classified board structure features continuity of direction and preservation of skill, but has come under

Flashcard 1743849131276

Question
Staggered Board of Directors Español

status measured difficulty not learned 37% [default] 0
agalo Tailandés Tamil Tayiko Telugu Turco Ucraniano Urdu Uzbeko Vietnamita Xhosa Yidis Yoruba Zulú Inglés detectado Traducir del Inglés Mostrando la traducción de En cambio, traducir staggered board of directors ¿Quisiste decir ""? <span>junta escalonada de directores junta escalonada de directores Más Más --------------- Afrikáans Albanés Alemán Amárico Árabe Armenio Azerbaiyano Bengalí Bielorruso Birmano Bosnio Búlgaro Canarés Catalán Cebuano Checo

Annotation 1743853587724

What is a 'Proxy Statement'
#investopedia

A proxy statement is a document containing the information the Securities and Exchange Commission (SEC) requires companies to provide to shareholders so shareholders can make informed decisions about matters that will be brought up at an annual or special stockholder meeting. Issues covered in a proxy statement can include proposals for new additions to the board of directors, information on directors' salaries, information on bonus and options plans for directors, and any declarations made by the company's management.

Proxy Statement
[imagelink] <span>What is a 'Proxy Statement' A proxy statement is a document containing the information the Securities and Exchange Commission (SEC) requires companies to provide to shareholders so shareholders can make informed decisions about matters that will be brought up at an annual or special stockholder meeting. Issues covered in a proxy statement can include proposals for new additions to the board of directors, information on directors' salaries, information on bonus and options plans for directors, and any declarations made by the company's management. BREAKING DOWN 'Proxy Statement' A proxy statement must be filed by a publicly traded company before shareholder meetings, and it discloses material

Annotation 1743859617036

Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors.

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors. Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-te

Annotation 1743861189900

Market Factors
Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position.

Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management.

Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders.

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors. Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. Non-Market Factors These factors include the legal environment, the media, and the corporate governance industry itself.

Annotation 1743864597772

Non-Market Factors

These factors include the legal environment, the media, and the corporate governance industry itself.

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
on for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. <span>Non-Market Factors These factors include the legal environment, the media, and the corporate governance industry itself. <span><body><html>

Flashcard 1743869578508

Tags
Question
This reading will focus on [...] and [...] risk as it relates to investment management.
economic

financial

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
This reading will focus on economic and financial risk as it relates to investment management. All businesses and investors manage risk in the choices they make, even if not conciously. Business and investing are about allocating resources and capital to chosen risks

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743872986380

All businesses and investors manage risk in the choices they make, even if not conciously. Business and investing are about allocating resources and capital to chosen risks. In their decision process, businesses and investors may take steps to avoid some risks, pursue the risks that provide the highest rewards, and measure and mitigate their exposure to these risks as necessary. Risk management processes and tools make difficult business and financial problems easier to address. Risk is not just a matter of fate; it can be actively controled with decisions, within a risk management framework. Risk is an integral part of the business or investment process. Even in the earliest models of modern portfolio theory, such as mean–variance portfolio optimization and the capital asset pricing model, investment return is linked directly to risk but requires that risk be managed optimally. Proper identification and measurement of risk, and keeping risks aligned with the goals of the enterprise, are key factors in managing businesses and investments. Good risk management results in a higher chance of a preferred outcome—more value for the company or portfolio or more utility for the individual.

Parent (intermediate) annotation

Open it
This reading will focus on economic and financial risk as it relates to investment management. All businesses and investors manage risk in the choices they make, even if not conciously. Business and investing are about allocating resources and capital to chosen risks. In their decision process, businesses and investors may take steps to avoid some risks, pursue the risks that provide the highest rewards, and measure and mitigate their exposure to these risks as necessary. Risk management processes and tools make difficult business and financial problems easier to address. Risk is not just a matter of fate; it can be actively controled with decisions, within a risk management framework . Risk is an integral part of the business or investment process. Even in the earliest models of modern portfolio theory, such as mean–variance portfolio optimization and the capital asset pricing model, investment return is linked directly to risk but requires that risk be managed optimally. Proper identification and measurement of risk, and keeping risks aligned with the goals of the enterprise, are key factors in managing businesses and investments. Good risk management results in a higher chance of a preferred outcome—more value for the company or portfolio or more utility for the individual. Portfolio managers need to be familiar with risk management not only to improve the portfolio’s risk–return outcome, but also because of two other ways in which they use ri

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743874821388

Portfolio managers need to be familiar with risk management not only to improve the portfolio’s risk–return outcome, but also because of two other ways in which they use risk management at an enterprise level. First, they help to manage their own companies that have their own enterprise risk issues. Second, many portfolio assets are claims on companies that have risks. Portfolio managers need to evaluate the companies’ risks and how those companies are addressing them.

Parent (intermediate) annotation

Open it
e goals of the enterprise, are key factors in managing businesses and investments. Good risk management results in a higher chance of a preferred outcome—more value for the company or portfolio or more utility for the individual. <span>Portfolio managers need to be familiar with risk management not only to improve the portfolio’s risk–return outcome, but also because of two other ways in which they use risk management at an enterprise level. First, they help to manage their own companies that have their own enterprise risk issues. Second, many portfolio assets are claims on companies that have risks. Portfolio managers need to evaluate the companies’ risks and how those companies are addressing them. This reading takes talks about the risk management of enterprises in general and portfolio risk management . The principles underlying portfolio risk management are gene

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743876394252

This reading takes talks about the risk management of enterprises in general and portfolio risk management. The principles underlying portfolio risk management are generally applicable to the risk management of financial and non-financial institutions as well.

Parent (intermediate) annotation

Open it
wn companies that have their own enterprise risk issues. Second, many portfolio assets are claims on companies that have risks. Portfolio managers need to evaluate the companies’ risks and how those companies are addressing them. <span>This reading takes talks about the risk management of enterprises in general and portfolio risk management . The principles underlying portfolio risk management are generally applicable to the risk management of financial and non-financial institutions as well. The concept of risk management applies to individuals. Although many large entities formally practice risk management, most individuals practice it informally and disorderl

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743878491404

The concept of risk management applies to individuals. Although many large entities formally practice risk management, most individuals practice it informally and disorderly, oftentimes responding to risk events after they occur, and they ignore more subtle risks often. Many individuals simply do not view risk management as a formal, systematic process that would help them achieve not only their financial goals but also the ultimate end result of happiness, or maximum utility as economists like to call it, but they should.

Parent (intermediate) annotation

Open it
risk management of enterprises in general and portfolio risk management . The principles underlying portfolio risk management are generally applicable to the risk management of financial and non-financial institutions as well. <span>The concept of risk management applies to individuals. Although many large entities formally practice risk management, most individuals practice it informally and disorderly, oftentimes responding to risk events after they occur, and they ignore more subtle risks often. Many individuals simply do not view risk management as a formal, systematic process that would help them achieve not only their financial goals but also the ultimate end result of happiness, or maximum utility as economists like to call it, but they should. Although the primary focus of this reading is on institutions, we will also cover risk management as it applies to individuals. We will show that many common themes underli

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743880064268

Although the primary focus of this reading is on institutions, we will also cover risk management as it applies to individuals. We will show that many common themes underlie risk management—themes that are applicable to both organizations and individuals.

Parent (intermediate) annotation

Open it
ot view risk management as a formal, systematic process that would help them achieve not only their financial goals but also the ultimate end result of happiness, or maximum utility as economists like to call it, but they should. <span>Although the primary focus of this reading is on institutions, we will also cover risk management as it applies to individuals. We will show that many common themes underlie risk management—themes that are applicable to both organizations and individuals. Although often viewed as defensive, risk management is a valuable offensive weapon in the manager’s arsenal. In the quest for preferred outcomes, such as higher profit, ret

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743881637132

Although often viewed as defensive, risk management is a valuable offensive weapon in the manager’s arsenal. In the quest for preferred outcomes, such as higher profit, returns, or share price, management does not usually get to choose the outcomes but does choose the risks it takes in pursuit of those outcomes. The choice of which risks to undertake through the allocation of its scarce resources is the key tool available to management. An organization with a comprehensive risk management culture in place, in which risk is integral to every key strategy and decision, should perform better in the long-term, in good times and bad, as a result of better decision making.

Parent (intermediate) annotation

Open it
of this reading is on institutions, we will also cover risk management as it applies to individuals. We will show that many common themes underlie risk management—themes that are applicable to both organizations and individuals. <span>Although often viewed as defensive, risk management is a valuable offensive weapon in the manager’s arsenal. In the quest for preferred outcomes, such as higher profit, returns, or share price, management does not usually get to choose the outcomes but does choose the risks it takes in pursuit of those outcomes. The choice of which risks to undertake through the allocation of its scarce resources is the key tool available to management. An organization with a comprehensive risk management culture in place, in which risk is integral to every key strategy and decision, should perform better in the long-term, in good times and bad, as a result of better decision making. The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743883472140

The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following:

• What is risk management, and why is it important?

• What risks does an organization (or individual) face in pursuing its objectives?

• How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results?

• How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities?

• How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks?

The answers to these questions collectively help to define the process of risk management.

Parent (intermediate) annotation

Open it
ganization with a comprehensive risk management culture in place, in which risk is integral to every key strategy and decision, should perform better in the long-term, in good times and bad, as a result of better decision making. <span>The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following: What is risk management, and why is it important? What risks does an organization (or individual) face in pursuing its objectives? How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results? How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities? How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks? The answers to these questions collectively help to define the process of risk management. <span><body><html>

Original toplevel document

Reading 40  Risk Management: An Introduction Intro

Annotation 1743885045004

Subject 1. Ethics
 Ethics is the study of moral principles used to make good choices.
• Ethical principles are beliefs regarding what is good, acceptable, or responsible behavior, and what is bad, unacceptable, or forbidden behavior. They provide guidance for our behavior.

• Ethical conduct is behavior that follows moral principles.

• Ethical actions are those actions that are perceived as beneficial and conform to

the ethical expectations of society.

 Ethics encompass a set of moral principles (code of ethics) and standards of conduct that provide guidance for our behavior. Violations can harm the community in a variety of ways.

Annotation 1743887928588

Subject 2. Ethics and Professionalism
 A profession is:
• based on specialized knowledge and skills.

• based on service to others.

• practiced by members who share and agree to adhere to a common code of

ethics.

A profession's code of ethics:

• communicates the shared principles and expected behaviors of its members.

• generates confidence not only among members of the organization but also

among non-members (clients, prospective clients, and/or the general public).

 A profession may adopt standards of conduct to enhance and clarify the code of ethics.

Annotation 1743905230092

Subject 3. Challenges to Ethical Conduct
 Challenges to ethical behavior include:
• the overconfidence bias. Most of us simply assume that we are good people and will therefore make sound ethical decisions. This overconfidence in one's own moral compass can lead to making decisions without serious ethical reflection.

• situational influences, which are external factors such as environmental or cultural elements. They can motivate individuals to act in their short-term interests without recognizing the long-term risks or consequences for themselves and others. Examples include financial rewards, prestige, and loyalty to employer and colleagues.

Annotation 1743909948684

Subject 4. The Importance of Ethical Conduct in the Investment Industry
#cabra-session #challenges-to-ethical-conduct #ethics #has-images #importance-ethical-conduct-investment-industry #reading-rene-toussaint
 High ethical standards are important for the investment industry and investment professionals. This is because the industry is built almost entirely on trust. Trust is important in the investment industry for several reasons:
• The nature of the client relationship

• The nature of investment products and services

 Clients must trust investment professionals to use their specialized skills and knowledge to serve clients and protect client assets. All stakeholders will gain long-term benefits when investment professionals adhere to high ethical standards.

Annotation 1743915977996

Subject 5. Ethical vs. Legal Standards
 Laws often codify ethical actions that lead to better outcomes for society or specific groups of stakeholders. Legal and ethical conduct often coincide, but they are not always the same.
• Some legal behaviors are not considered ethical.

• Some ethical behaviors may not be legal in certain countries.

 Laws and regulations are not always the best mechanism to reduce unethical behavior. They often lag behind current circumstances; legal standards are often created to address past ethical failings and do not provide guidance for an evolving and increasingly complex world. In addition, new laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different but similarly problematic conduct. Investment professionals should act beyond legal standards, making good judgments and responsible choices even in the absence of clear laws or rules.

Annotation 1743920696588

Subject 6. Ethical Decision-Making Frameworks

The CFA Institute Ethical Decision-Making Framework is a tool for analyzing and evaluating ethical scenarios in the investment profession. The Identify-Consider-Act- Reflect framework advances a decision-making structure for situations that often fall outside the clear confines of "right" and "wrong."

Neither a linear model nor a checklist, the framework provides a summary of the key elements of making ethical decisions. The framework is offered with the understanding that there likely will be additional influences, conflicts, and actions unique to each ethical scenario and beyond those detailed in the framework.

Identify: ethical principles, duties to others (to whom do you owe a duty?), important facts, conflicts of interest.

Consider: situational Influences, alternative actions, additional guidance.
Act: make a decision or elevate the issue to a higher authority.
Reflect: What did you learn? The lessons you learn will help you reach ethical decisions more quickly in the future

Annotation 1743937998092

#logic
The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems.

Mathematical logic - Wikipedia
f mathematics). Mathematical logic is a subfield of mathematics exploring the applications of formal logic to mathematics. It bears close connections to metamathematics, the foundations of mathematics, and theoretical computer science. [1] <span>The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems. Mathematical logic is often divided into the fields of set theory, model theory, recursion theory, and proof theory. These areas share basic results on logic, particularly first-order

Annotation 1743950581004

#state-space-models
Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields.

Belief propagation - Wikipedia
st of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (April 2009) (Learn how and when to remove this template message) <span>Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields. It calculates the marginal distribution for each unobserved node, conditional on any observed nodes. Belief propagation is commonly used in artificial intelligence and information theor

Flashcard 1743952678156

Tags
#state-space-models
Question
[...] is also known as sum-product message passing
Belief propagation

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields. </sp

Original toplevel document

Belief propagation - Wikipedia
st of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (April 2009) (Learn how and when to remove this template message) <span>Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields. It calculates the marginal distribution for each unobserved node, conditional on any observed nodes. Belief propagation is commonly used in artificial intelligence and information theor

Annotation 1744016379148

#metric-space #topological-space
In mathematics, a metric space is a set for which distances between all members of the set are defined. Those distances, taken together, are called a metric on the set. A metric on a space induces topological properties like open and closed sets, which lead to the study of more abstract topological spaces.

Metric space - Wikipedia
Metric space - Wikipedia Metric space From Wikipedia, the free encyclopedia Jump to: navigation, search In mathematics, a metric space is a set for which distances between all members of the set are defined. Those distances, taken together, are called a metric on the set. A metric on a space induces topological properties like open and closed sets, which lead to the study of more abstract topological spaces. The most familiar metric space is 3-dimensional Euclidean space. In fact, a "metric" is the generalization of the Euclidean metric arising from the four long-known propertie

Annotation 1744064875788

#topology
In a topological space, a closed set can be defined as a set which contains all its limit points.

Closed set - Wikipedia
en set. For a set closed under an operation, see closure (mathematics). For other uses, see Closed (disambiguation). In geometry, topology, and related branches of mathematics, a closed set is a set whose complement is an open set. [1] [2] <span>In a topological space, a closed set can be defined as a set which contains all its limit points. In a complete metric space, a closed set is a set which is closed under the limit operation. Contents [hide] 1 Equivalent definitions of a closed set 2 Properties of closed

Flashcard 1744130936076

Tags
#state-space-models
Question
Belief propagation is also known as [...]
sum-product message passing

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields.

Original toplevel document

Belief propagation - Wikipedia
st of references, but its sources remain unclear because it has insufficient inline citations. Please help to improve this article by introducing more precise citations. (April 2009) (Learn how and when to remove this template message) <span>Belief propagation, also known as sum-product message passing, is a message-passing algorithm for performing inference on graphical models, such as Bayesian networks and Markov random fields. It calculates the marginal distribution for each unobserved node, conditional on any observed nodes. Belief propagation is commonly used in artificial intelligence and information theor

Annotation 1744134606092

#vector-space

A norm must also satisfy certain properties pertaining to scalability and additivity which are given in the formal definition below.

Norm (mathematics) - Wikipedia
ositive length or size to each vector in a vector space—save for the zero vector, which is assigned a length of zero. A seminorm, on the other hand, is allowed to assign zero length to some non-zero vectors (in addition to the zero vector). <span>A norm must also satisfy certain properties pertaining to scalability and additivity which are given in the formal definition below. A simple example is two dimensional Euclidean space R 2 equipped with the "Euclidean norm" (see below) Elements in this vector space (e.g., (3, 7)) are usually drawn as arr

Flashcard 1744136703244

Tags
#vector-space
Question

A norm must also satisfy certain properties pertaining to [...property...]

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
A norm must also satisfy certain properties pertaining to scalability and additivity which are given in the formal definition below.

Original toplevel document

Norm (mathematics) - Wikipedia
ositive length or size to each vector in a vector space—save for the zero vector, which is assigned a length of zero. A seminorm, on the other hand, is allowed to assign zero length to some non-zero vectors (in addition to the zero vector). <span>A norm must also satisfy certain properties pertaining to scalability and additivity which are given in the formal definition below. A simple example is two dimensional Euclidean space R 2 equipped with the "Euclidean norm" (see below) Elements in this vector space (e.g., (3, 7)) are usually drawn as arr

Annotation 1744140635404

#inner-product-space #vector-space
Among the topologies of vector spaces, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors.

Parent (intermediate) annotation

Open it
l analysis, as function spaces, whose vectors are functions. These vector spaces are generally endowed with additional structure, which may be a topology, allowing the consideration of issues of proximity and continuity. <span>Among these topologies, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors. This is particularly the case of Banach spaces and Hilbert spaces, which are fundamental in mathematical analysis. <span><body><html>

Original toplevel document

Vector space - Wikipedia
roperties, which in some cases can be visualized as arrows. Vector spaces are the subject of linear algebra and are well characterized by their dimension, which, roughly speaking, specifies the number of independent directions in the space. <span>Infinite-dimensional vector spaces arise naturally in mathematical analysis, as function spaces, whose vectors are functions. These vector spaces are generally endowed with additional structure, which may be a topology, allowing the consideration of issues of proximity and continuity. Among these topologies, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors. This is particularly the case of Banach spaces and Hilbert spaces, which are fundamental in mathematical analysis. Historically, the first ideas leading to vector spaces can be traced back as far as the 17th century's analytic geometry, matrices, systems of linear equations, and Euclidean vectors.

Flashcard 1744145353996

Tags
#inner-product-space #vector-space
Question
Among the topologies of vector spaces, those that are defined by [...] are more commonly used, as having a notion of distance between two vectors.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Among the topologies of vector spaces, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors.

Original toplevel document

Vector space - Wikipedia
roperties, which in some cases can be visualized as arrows. Vector spaces are the subject of linear algebra and are well characterized by their dimension, which, roughly speaking, specifies the number of independent directions in the space. <span>Infinite-dimensional vector spaces arise naturally in mathematical analysis, as function spaces, whose vectors are functions. These vector spaces are generally endowed with additional structure, which may be a topology, allowing the consideration of issues of proximity and continuity. Among these topologies, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors. This is particularly the case of Banach spaces and Hilbert spaces, which are fundamental in mathematical analysis. Historically, the first ideas leading to vector spaces can be traced back as far as the 17th century's analytic geometry, matrices, systems of linear equations, and Euclidean vectors.

Flashcard 1744147189004

Tags
#inner-product-space #vector-space
Question
Among the topologies of vector spaces, those that are defined by a norm or inner product are more commonly used, as having a notion of [...].
distance between two vectors
Norm can be understood as the inner product of a vector with itself.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Among the topologies of vector spaces, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors.

Original toplevel document

Vector space - Wikipedia
roperties, which in some cases can be visualized as arrows. Vector spaces are the subject of linear algebra and are well characterized by their dimension, which, roughly speaking, specifies the number of independent directions in the space. <span>Infinite-dimensional vector spaces arise naturally in mathematical analysis, as function spaces, whose vectors are functions. These vector spaces are generally endowed with additional structure, which may be a topology, allowing the consideration of issues of proximity and continuity. Among these topologies, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors. This is particularly the case of Banach spaces and Hilbert spaces, which are fundamental in mathematical analysis. Historically, the first ideas leading to vector spaces can be traced back as far as the 17th century's analytic geometry, matrices, systems of linear equations, and Euclidean vectors.

Flashcard 1744148761868

Tags
#inner-product-space #vector-space
Question
Functional spaces are generally endowed with additional structure than vector spaces, which may be [...], allowing the consideration of issues of proximity and continuity.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Functional spaces are generally endowed with additional structure than vector spaces, which may be a topology, allowing the consideration of issues of proximity and continuity.

Original toplevel document

Vector space - Wikipedia
roperties, which in some cases can be visualized as arrows. Vector spaces are the subject of linear algebra and are well characterized by their dimension, which, roughly speaking, specifies the number of independent directions in the space. <span>Infinite-dimensional vector spaces arise naturally in mathematical analysis, as function spaces, whose vectors are functions. These vector spaces are generally endowed with additional structure, which may be a topology, allowing the consideration of issues of proximity and continuity. Among these topologies, those that are defined by a norm or inner product are more commonly used, as having a notion of distance between two vectors. This is particularly the case of Banach spaces and Hilbert spaces, which are fundamental in mathematical analysis. Historically, the first ideas leading to vector spaces can be traced back as far as the 17th century's analytic geometry, matrices, systems of linear equations, and Euclidean vectors.

Flashcard 1744151121164

Tags
#lebesgue-integration
Question
Riemann's definition of integral starts with the construction of [...] that converge to the integral of a given function.
a sequence of easily calculated areas

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Riemann's definition of integral starts with the construction of a sequence of easily calculated areas that converge to the integral of a given function.

Original toplevel document

Lebesgue integration - Wikipedia
igor in mathematics in the nineteenth century, mathematicians attempted to put integral calculus on a firm foundation. The Riemann integral—proposed by Bernhard Riemann (1826–1866)—is a broadly successful attempt to provide such a foundation. <span>Riemann's definition starts with the construction of a sequence of easily calculated areas that converge to the integral of a given function. This definition is successful in the sense that it gives the expected answer for many already-solved problems, and gives useful results for many other problems. However, Riemann integ

Flashcard 1744152694028

Tags
#lebesgue-integration
Question
Riemann integration does not interact well with [...]
taking limits of sequences of functions

Think the Cantor devil's staircase. Integration is essentials the limit of sums.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
However, Riemann integration does not interact well with taking limits of sequences of functions

Original toplevel document

Lebesgue integration - Wikipedia
e of easily calculated areas that converge to the integral of a given function. This definition is successful in the sense that it gives the expected answer for many already-solved problems, and gives useful results for many other problems. <span>However, Riemann integration does not interact well with taking limits of sequences of functions, making such limiting processes difficult to analyze. This is important, for instance, in the study of Fourier series, Fourier transforms, and other topics. The Lebesgue integral is bet

Flashcard 1744156101900

Tags
#lebesgue-integration
Question
The insight is that one should be able to [...], while preserving the value of the integral.
rearrange the values of a function freely

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The insight is that one should be able to rearrange the values of a function freely, while preserving the value of the integral.

Original toplevel document

Lebesgue integration - Wikipedia
. After I have taken all the money out of my pocket I order the bills and coins according to identical values and then I pay the several heaps one after the other to the creditor. This is my integral. —  Source: (Siegmund-Schultze 2008) <span>The insight is that one should be able to rearrange the values of a function freely, while preserving the value of the integral. This process of rearrangement can convert a very pathological function into one that is "nice" from the point of view of integration, and thus let such pathological functions

Flashcard 1744157674764

Tags
#lebesgue-integration
Question
The insight is that one should be able to rearrange the values of a function freely, while [...].
preserving the value of the integral

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The insight is that one should be able to rearrange the values of a function freely, while preserving the value of the integral.

Original toplevel document

Lebesgue integration - Wikipedia
. After I have taken all the money out of my pocket I order the bills and coins according to identical values and then I pay the several heaps one after the other to the creditor. This is my integral. —  Source: (Siegmund-Schultze 2008) <span>The insight is that one should be able to rearrange the values of a function freely, while preserving the value of the integral. This process of rearrangement can convert a very pathological function into one that is "nice" from the point of view of integration, and thus let such pathological functions

Flashcard 1744159247628

Tags
#lebesgue-integration
Question
Riemann integral considers the area under a curve as made out of [...shape...]
vertical rectangles

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
While the Riemann integral considers the area under a curve as made out of vertical rectangles, the Lebesgue definition considers horizontal slabs that are not necessarily just rectangles, and so it is more flexible.

Original toplevel document

Lebesgue integration - Wikipedia
es, Fourier transforms, and other topics. The Lebesgue integral is better able to describe how and when it is possible to take limits under the integral sign (via the powerful monotone convergence theorem and dominated convergence theorem). <span>While the Riemann integral considers the area under a curve as made out of vertical rectangles, the Lebesgue definition considers horizontal slabs that are not necessarily just rectangles, and so it is more flexible. For this reason, the Lebesgue definition makes it possible to calculate integrals for a broader class of functions. For example, the Dirichlet function, which is 0 where its argument is

Flashcard 1744160820492

Tags
#lebesgue-integration
Question
the Lebesgue definition of integration considers [...] that are not necessarily just rectangles
horizontal slabs

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
While the Riemann integral considers the area under a curve as made out of vertical rectangles, the Lebesgue definition considers horizontal slabs that are not necessarily just rectangles, and so it is more flexible.

Original toplevel document

Lebesgue integration - Wikipedia
es, Fourier transforms, and other topics. The Lebesgue integral is better able to describe how and when it is possible to take limits under the integral sign (via the powerful monotone convergence theorem and dominated convergence theorem). <span>While the Riemann integral considers the area under a curve as made out of vertical rectangles, the Lebesgue definition considers horizontal slabs that are not necessarily just rectangles, and so it is more flexible. For this reason, the Lebesgue definition makes it possible to calculate integrals for a broader class of functions. For example, the Dirichlet function, which is 0 where its argument is

Flashcard 1744162393356

Tags
#lebesgue-integration
Question
it is actually impossible to assign a length to [...] in a way that preserves some natural additivity and translation invariance properties.
all subsets of ℝ

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
As later set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite

Original toplevel document

Lebesgue integration - Wikipedia
a useful abstraction of the notion of length of subsets of the real line—and, more generally, area and volume of subsets of Euclidean spaces. In particular, it provided a systematic answer to the question of which subsets of ℝ have a length. <span>As later set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite. The Riemann integral uses the notion of length explicitly. Indeed, the element of calculation for the Riemann integral is the rectangle [a, b] × [c, d], whose area is calculated to be

Flashcard 1744163966220

Tags
#lebesgue-integration
Question
as later set theory developments showed, it is actually impossible to assign a length (hence a measure) to all subsets of ℝ in a way that preserves some [...] invariance properties.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
As later set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite.

Original toplevel document

Lebesgue integration - Wikipedia
a useful abstraction of the notion of length of subsets of the real line—and, more generally, area and volume of subsets of Euclidean spaces. In particular, it provided a systematic answer to the question of which subsets of ℝ have a length. <span>As later set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite. The Riemann integral uses the notion of length explicitly. Indeed, the element of calculation for the Riemann integral is the rectangle [a, b] × [c, d], whose area is calculated to be

Flashcard 1744165539084

Tags
#lebesgue-integration
Question
the Banach-Tarski paradox suggests that picking out [...] is an essential prerequisite.
a suitable class of measurable subsets

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
er set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out <span>a suitable class of measurable subsets is an essential prerequisite. <span><body><html>

Original toplevel document

Lebesgue integration - Wikipedia
a useful abstraction of the notion of length of subsets of the real line—and, more generally, area and volume of subsets of Euclidean spaces. In particular, it provided a systematic answer to the question of which subsets of ℝ have a length. <span>As later set theory developments showed (see non-measurable set), it is actually impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite. The Riemann integral uses the notion of length explicitly. Indeed, the element of calculation for the Riemann integral is the rectangle [a, b] × [c, d], whose area is calculated to be

Flashcard 1744168160524

Tags
#lebesgue-integration
Question
The set of [...] is closed under algebraic operations
measurable functions

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits:

Original toplevel document

Lebesgue integration - Wikipedia
∈ R . {\displaystyle \{x\,\mid \,f(x)>t\}\in X\quad \forall t\in \mathbb {R} .} We can show that this is equivalent to requiring that the pre-image of any Borel subset of ℝ be in X. <span>The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits: sup k ∈ N f

Flashcard 1744169733388

Tags
#lebesgue-integration
Question
The set of measurable functions is closed under [...], but more importantly it is closed under various kinds of point-wise sequential limits:
algebraic operations

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits:

Original toplevel document

Lebesgue integration - Wikipedia
∈ R . {\displaystyle \{x\,\mid \,f(x)>t\}\in X\quad \forall t\in \mathbb {R} .} We can show that this is equivalent to requiring that the pre-image of any Borel subset of ℝ be in X. <span>The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits: sup k ∈ N f

Flashcard 1744171306252

Tags
#lebesgue-integration
Question
The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of [...]:
point-wise sequential limits

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits:

Original toplevel document

Lebesgue integration - Wikipedia
∈ R . {\displaystyle \{x\,\mid \,f(x)>t\}\in X\quad \forall t\in \mathbb {R} .} We can show that this is equivalent to requiring that the pre-image of any Borel subset of ℝ be in X. <span>The set of measurable functions is closed under algebraic operations, but more importantly it is closed under various kinds of point-wise sequential limits: sup k ∈ N f

Annotation 1744174714124

[unknown IMAGE 1744178121996]
#has-images
The sequence xn is shown in blue. The two red curves approach the limit superior and limit inferior of xn, shown as dashed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of the two. The inferior and superior limits agree if and only if the sequence is convergent (i.e., when there is a single limit).

Limit superior and limit inferior - Wikipedia
liminf, inferior limit, lower limit, or inner limit; limit superior is also known as supremum limit, limit supremum, limsup, superior limit, upper limit, or outer limit. [imagelink] An illustration of limit superior and limit inferior. <span>The sequence x n is shown in blue. The two red curves approach the limit superior and limit inferior of x n , shown as dashed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of the two. The inferior and superior limits agree if and only if the sequence is convergent (i.e., when there is a single limit). Contents [hide] 1 Definition for sequences 2 The case of sequences of real numbers 2.1 Interpretation 2.2 Properties 2.2.1 Examples 3 Real-valued functions 4 Funct

Flashcard 1744180219148

[unknown IMAGE 1744178121996]
Tags
#has-images
Question
The sequence xn is shown in blue. The two red curves approach the [...] and [...] of xn, shown as dashed black lines.
limit superior and limit inferior

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The sequence x n is shown in blue. The two red curves approach the limit superior and limit inferior of x n , shown as dashed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of

Original toplevel document

Limit superior and limit inferior - Wikipedia
liminf, inferior limit, lower limit, or inner limit; limit superior is also known as supremum limit, limit supremum, limsup, superior limit, upper limit, or outer limit. [imagelink] An illustration of limit superior and limit inferior. <span>The sequence x n is shown in blue. The two red curves approach the limit superior and limit inferior of x n , shown as dashed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of the two. The inferior and superior limits agree if and only if the sequence is convergent (i.e., when there is a single limit). Contents [hide] 1 Definition for sequences 2 The case of sequences of real numbers 2.1 Interpretation 2.2 Properties 2.2.1 Examples 3 Real-valued functions 4 Funct

Flashcard 1744181792012

[unknown IMAGE 1744178121996]
Tags
#has-images
Question
The sequence xn is shown in blue. The inferior and superior limits agree if and only if the sequence is [...].
convergent

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
ed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of the two. The inferior and superior limits agree if and only if the sequence is <span>convergent (i.e., when there is a single limit). <span><body><html>

Original toplevel document

Limit superior and limit inferior - Wikipedia
liminf, inferior limit, lower limit, or inner limit; limit superior is also known as supremum limit, limit supremum, limsup, superior limit, upper limit, or outer limit. [imagelink] An illustration of limit superior and limit inferior. <span>The sequence x n is shown in blue. The two red curves approach the limit superior and limit inferior of x n , shown as dashed black lines. In this case, the sequence accumulates around the two limits. The superior limit is the larger of the two, and the inferior limit is the smaller of the two. The inferior and superior limits agree if and only if the sequence is convergent (i.e., when there is a single limit). Contents [hide] 1 Definition for sequences 2 The case of sequences of real numbers 2.1 Interpretation 2.2 Properties 2.2.1 Examples 3 Real-valued functions 4 Funct

Flashcard 1744183364876

Tags
#measure-theory
Question
measurable function is a function between [...] such that the preimage of any measurable set is measurable

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics and in particular measure theory, a measurable function is a function between two measurable spaces such that the preimage of any measurable set is measurable

Original toplevel document

Measurable function - Wikipedia
Measurable function - Wikipedia Measurable function From Wikipedia, the free encyclopedia Jump to: navigation, search In mathematics and in particular measure theory, a measurable function is a function between two measurable spaces such that the preimage of any measurable set is measurable, analogously to the definition that a function between topological spaces is continuous if the preimage of each open set is open. In real analysis, measurable functions are used in the

Flashcard 1744185724172

Tags
#measure-theory
Question
a measurable function is a function between two measurable spaces such that [...]
the preimage of any measurable set is measurable

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics and in particular measure theory, a measurable function is a function between two measurable spaces such that the preimage of any measurable set is measurable

Original toplevel document

Measurable function - Wikipedia
Measurable function - Wikipedia Measurable function From Wikipedia, the free encyclopedia Jump to: navigation, search In mathematics and in particular measure theory, a measurable function is a function between two measurable spaces such that the preimage of any measurable set is measurable, analogously to the definition that a function between topological spaces is continuous if the preimage of each open set is open. In real analysis, measurable functions are used in the

Annotation 1744187821324

#spanish
El entrenador de Manchester United cree que no hay "mucho entusiasmo" de la hinchada, aunque los futbolistas "les gusta jugar" en casa.

Noticias, Estadísticas y Resultados de Premiership de Inglaterra - ESPNDEPORTES - ESPNDeportes
[imagelink] 1dESPN Estadísticas e Información Kane llega a 100 goles en Premier League El goleador del Tottenham se reivindicó con ese tanto luego de fallar un penalti. [imagelink]play0:17 17h Mou criticó el ambiente tranquilo de Old Trafford <span>El entrenador de Manchester United cree que no hay "mucho entusiasmo" de la hinchada, aunque los futbolistas "les gusta jugar" en casa. [imagelink]play José Mourinho y el gol 'no soñado' de Alexis Sánchez (0:17) [imagelink]play Pep Guardiola insiste: 'No quiero a nadie en Manchester' (0:45) Prem Posiciones EQUIPO PJ

Annotation 1744196996364

Vladimir Arnold once said: "Kolmogorov – Poincaré – Gauss – Euler – Newton, are only five lives separating us from the source of our science".

Andrey Kolmogorov - Wikipedia
ichy cemetery. A quotation attributed to Kolmogorov is [translated into English]: "Every mathematician believes that he is ahead of the others. The reason none state this belief in public is because they are intelligent people." <span>Vladimir Arnold once said: "Kolmogorov – Poincaré – Gauss – Euler – Newton, are only five lives separating us from the source of our science". Awards and honours[edit source] Kolmogorov received numerous awards and honours both during and after his lifetime: Member of the Russian Academy of Sciences [1] Awarded the Stali

Flashcard 1744219802892

Tags
#lebesgue-integration
Question
The Riemann integral uses the notion of [...] explicitly.
length

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The Riemann integral uses the notion of length explicitly.

Original toplevel document

Lebesgue integration - Wikipedia
lly impossible to assign a length to all subsets of ℝ in a way that preserves some natural additivity and translation invariance properties. This suggests that picking out a suitable class of measurable subsets is an essential prerequisite. <span>The Riemann integral uses the notion of length explicitly. Indeed, the element of calculation for the Riemann integral is the rectangle [a, b] × [c, d], whose area is calculated to be (b − a)(d − c). The quantity b − a is the length of the base

Flashcard 1744222424332

Tags
#lebesgue-integration
Question
Even if a simple function can be written in many ways as [...], the integral is always the same. This can be shown using the additivity property of measures.
a linear combination of indicator functions

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Even if a simple function can be written in many ways as a linear combination of indicator functions, the integral is always the same. This can be shown using the additivity property of measures.

Original toplevel document

Lebesgue integration - Wikipedia
. {\displaystyle \int \left(\sum _{k}a_{k}1_{S_{k}}\right)\,\mathrm {d} \mu =\sum _{k}a_{k}\int 1_{S_{k}}\,d\mu =\sum _{k}a_{k}\,\mu (S_{k}).} The convention 0 × ∞ = 0 must be used, and the result may be infinite. <span>Even if a simple function can be written in many ways as a linear combination of indicator functions, the integral is always the same. This can be shown using the additivity property of measures. Some care is needed when defining the integral of a real-valued simple function, to avoid the undefined expression ∞ − ∞: one assumes that the representation

Flashcard 1744224259340

Tags
#lebesgue-integration
Question
Even if a simple function can be written in many ways as a linear combination of indicator functions, the integral is always the same. This can be shown using [...].

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Even if a simple function can be written in many ways as a linear combination of indicator functions, the integral is always the same. This can be shown using the additivity property of measures.

Original toplevel document

Lebesgue integration - Wikipedia
. {\displaystyle \int \left(\sum _{k}a_{k}1_{S_{k}}\right)\,\mathrm {d} \mu =\sum _{k}a_{k}\int 1_{S_{k}}\,d\mu =\sum _{k}a_{k}\,\mu (S_{k}).} The convention 0 × ∞ = 0 must be used, and the result may be infinite. <span>Even if a simple function can be written in many ways as a linear combination of indicator functions, the integral is always the same. This can be shown using the additivity property of measures. Some care is needed when defining the integral of a real-valued simple function, to avoid the undefined expression ∞ − ∞: one assumes that the representation

Annotation 1744226880780

#lebesgue-integration

To assign a value to the integral of the indicator function 1S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set:

Notice that the result may be equal to +∞ , unless μ is a finite measure.

Lebesgue integration - Wikipedia
x ) {\displaystyle \int _{E}f\,\mathrm {d} \mu =\int _{E}f\left(x\right)\,\mathrm {d} \mu \left(x\right)} for measurable real-valued functions f defined on E in stages: Indicator functions: <span>To assign a value to the integral of the indicator function 1 S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set: ∫ 1 S d μ = μ ( S ) . {\displaystyle \int 1_{S}\,\mathrm {d} \mu =\mu (S).} Notice that the result may be equal to +∞, unless μ is a finite measure. Simple functions: A finite linear combination of indicator functions ∑ k a

Annotation 1744228977932

#lebesgue-integration

A finite linear combination of indicator functions

where the coefficients ak are real numbers and the sets Sk are measurable, is called a measurable simple function.

Lebesgue integration - Wikipedia
μ = μ ( S ) . {\displaystyle \int 1_{S}\,\mathrm {d} \mu =\mu (S).} Notice that the result may be equal to +∞, unless μ is a finite measure. Simple functions: <span>A finite linear combination of indicator functions ∑ k a k 1 S k {\displaystyle \sum _{k}a_{k}1_{S_{k}}} where the coefficients a k are real numbers and the sets S k are measurable, is called a measurable simple function. We extend the integral by linearity to non-negative measurable simple functions. When the coefficients a k are non-negative, we set ∫ (

Flashcard 1744232385804

Tags
#lebesgue-integration
Question
We say that the Lebesgue integral of the measurable function f exists, or is defined if [...]:
at least one of and is finite

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
We say that the Lebesgue integral of the measurable function f exists, or is defined if at least one of and is finite:

Original toplevel document

Lebesgue integration - Wikipedia
| = f + + f − . {\displaystyle |f|=f^{+}+f^{-}.\quad } <span>We say that the Lebesgue integral of the measurable function f exists, or is defined if at least one of ∫ f + d μ {\displaystyle \int f^{+}\,\mathrm {d} \mu } and ∫ f − d μ {\displaystyle \int f^{-}\,\mathrm {d} \mu } is finite: min ( ∫ f +

Flashcard 1744234745100

Tags
#lebesgue-integration
Question

Complex valued functions can be similarly integrated, by [...].

considering the real part and the imaginary part separately

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Complex valued functions can be similarly integrated, by considering the real part and the imaginary part separately.

Original toplevel document

Lebesgue integration - Wikipedia
μ < ∞ , {\displaystyle \int |f|\,\mathrm {d} \mu <\infty ,} we say that f is Lebesgue integrable. It turns out that this definition gives the desirable properties of the integral. <span>Complex valued functions can be similarly integrated, by considering the real part and the imaginary part separately. If h=f+ig for real-valued integrable functions f, g, then the integral of h is defined by ∫ h d μ

Flashcard 1744236317964

Tags
#lebesgue-integration
Question
the domain of integration in Lebesgue integration is defined as a [...]
set

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
A technical issue in Lebesgue integration is that the domain of integration is defined as a set (a subset of a measure space), with no notion of orientation.

Original toplevel document

Lebesgue integration - Wikipedia
1 ] ) = 0 , {\displaystyle \int _{[0,1]}1_{\mathbf {Q} }\,\mathrm {d} \mu =\mu (\mathbf {Q} \cap [0,1])=0,} because Q is countable. Domain of integration[edit source] <span>A technical issue in Lebesgue integration is that the domain of integration is defined as a set (a subset of a measure space), with no notion of orientation. In elementary calculus, one defines integration with respect to an orientation: ∫ b a

Flashcard 1744237890828

Tags
#lebesgue-integration
Question
the domain of integration in Lebesgue integration has no notion of [...].
orientation

Is this why positive and negative part are dealt with separately?

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
A technical issue in Lebesgue integration is that the domain of integration is defined as a set (a subset of a measure space), with no notion of orientation.

Original toplevel document

Lebesgue integration - Wikipedia
1 ] ) = 0 , {\displaystyle \int _{[0,1]}1_{\mathbf {Q} }\,\mathrm {d} \mu =\mu (\mathbf {Q} \cap [0,1])=0,} because Q is countable. Domain of integration[edit source] <span>A technical issue in Lebesgue integration is that the domain of integration is defined as a set (a subset of a measure space), with no notion of orientation. In elementary calculus, one defines integration with respect to an orientation: ∫ b a

Flashcard 1744246279436

Tags
#linear-algebra
Question
The formula for the dot product of the vectors is [...]
uv=uvcosθ.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The formula for the dot product of the vectors is uv=‖u‖‖v‖cosθ.

Original toplevel document (pdf)

cannot see any pdfs

Flashcard 1744248900876

Tags
#linear-algebra
Question
The formula for [...] of the vectors is $$uv = \|u\| \|v \| \cos θ.$$
the dot product

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The formula for the dot product of the vectors is

Original toplevel document (pdf)

cannot see any pdfs

Flashcard 1744250473740

Tags
#dot-product
Question
[...] takes two equal-length sequences of numbers and returns a single number.
dot product

or scalar product

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics, the dot product or scalar product [note 1] is an algebraic operation that takes two equal-length sequences of numbers (usually coordinate vectors) and returns a single number.

Original toplevel document

Dot product - Wikipedia
ia Jump to: navigation, search "Scalar product" redirects here. For the abstract scalar product, see Inner product space. For the product of a vector and a scalar, see Scalar multiplication. <span>In mathematics, the dot product or scalar product [note 1] is an algebraic operation that takes two equal-length sequences of numbers (usually coordinate vectors) and returns a single number. In Euclidean geometry, the dot product of the Cartesian coordinates of two vectors is widely used and often called inner product (or rarely projection product); see also inner product s

Flashcard 1744253357324

Tags
#dot-product
Question

if a and b are [...], then the angle between them is 90° and

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
if a and b are orthogonal, then the angle between them is 90° and

Original toplevel document

Dot product - Wikipedia
‖ cos ⁡ ( θ ) , {\displaystyle \mathbf {a} \cdot \mathbf {b} =\|\mathbf {a} \|\ \|\mathbf {b} \|\cos(\theta ),} where θ is the angle between a and b. In particular, <span>if a and b are orthogonal, then the angle between them is 90° and a ⋅ b = 0. {\displaystyle \mathbf {a} \cdot \mathbf {b} =0.} At the other extreme, if they are codirectional, then the angle between them is 0° and a ⋅ b

Flashcard 1744254930188

Tags
#linear-algebra
Question
the cross product is [...123...].

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics and vector algebra, the cross product or vector product (occasionally directed area product to emphasize the geometric significance) is a binary operation on two vectors in three-dimensional space (R 3 ) and is denoted by the symbol ×. Given two linearly independent vectors a and b, the cross product, a × b, is a vector that is perpendicular to both a and b and thus normal to the plane

Original toplevel document

Cross product - Wikipedia
edia, the free encyclopedia Jump to: navigation, search This article is about the cross product of two vectors in three-dimensional Euclidean space. For other uses, see Cross product (disambiguation). <span>In mathematics and vector algebra, the cross product or vector product (occasionally directed area product to emphasize the geometric significance) is a binary operation on two vectors in three-dimensional space (R 3 ) and is denoted by the symbol ×. Given two linearly independent vectors a and b, the cross product, a × b, is a vector that is perpendicular to both a and b and thus normal to the plane containing them. It has many applications in mathematics, physics, engineering, and computer programming. It should not be confused with dot product (projection product). If two vectors have the same

Flashcard 1744257289484

Tags
#linear-algebra
Question
the cross product is occasionally called directed area product to emphasize [...]
the geometric significance

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics and vector algebra, the cross product or vector product (occasionally directed area product to emphasize the geometric significance) is a binary operation on two vectors in three-dimensional space (R 3 ) and is denoted by the symbol ×. Given two linearly independent vectors a and b, the cross product, a × b, is a ve

Original toplevel document

Cross product - Wikipedia
edia, the free encyclopedia Jump to: navigation, search This article is about the cross product of two vectors in three-dimensional Euclidean space. For other uses, see Cross product (disambiguation). <span>In mathematics and vector algebra, the cross product or vector product (occasionally directed area product to emphasize the geometric significance) is a binary operation on two vectors in three-dimensional space (R 3 ) and is denoted by the symbol ×. Given two linearly independent vectors a and b, the cross product, a × b, is a vector that is perpendicular to both a and b and thus normal to the plane containing them. It has many applications in mathematics, physics, engineering, and computer programming. It should not be confused with dot product (projection product). If two vectors have the same

Flashcard 1744258862348

Tags
#calculus
Question
The two branches of calculus are related to each other by the [...].
fundamental theorem of calculus

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
ches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the <span>fundamental theorem of calculus. <span><body><html>

Original toplevel document

Calculus - Wikipedia
small pebble', used for counting and calculations, as on an abacus) [1] is the mathematical study of continuous change, in the same way that geometry is the study of shape and algebra is the study of generalizations of arithmetic operations. <span>It has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental theorem of calculus. Both branches make use of the fundamental notions of convergence of infinite sequences and infinite series to a well-defined limit. Generally, modern calculus is considered to have been

Flashcard 1744261483788

Tags
#calculus
Question
differential calculus concerns [...]
rates of change and slopes of curves

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Calculus has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental th

Original toplevel document

Calculus - Wikipedia
small pebble', used for counting and calculations, as on an abacus) [1] is the mathematical study of continuous change, in the same way that geometry is the study of shape and algebra is the study of generalizations of arithmetic operations. <span>It has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental theorem of calculus. Both branches make use of the fundamental notions of convergence of infinite sequences and infinite series to a well-defined limit. Generally, modern calculus is considered to have been

Flashcard 1744263843084

Tags
#calculus
Question
integral calculus concerns [...] and [...] .[3]
accumulation of quantities and the areas under and between curves

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Calculus has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental theorem of calculus.

Original toplevel document

Calculus - Wikipedia
small pebble', used for counting and calculations, as on an abacus) [1] is the mathematical study of continuous change, in the same way that geometry is the study of shape and algebra is the study of generalizations of arithmetic operations. <span>It has two major branches, differential calculus (concerning rates of change and slopes of curves), [2] and integral calculus (concerning accumulation of quantities and the areas under and between curves). [3] These two branches are related to each other by the fundamental theorem of calculus. Both branches make use of the fundamental notions of convergence of infinite sequences and infinite series to a well-defined limit. Generally, modern calculus is considered to have been

Flashcard 1744266988812

Tags
#calculus-of-variations
Question
in Calculus of variations, variations mean [...]
small changes in functions and functionals,

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. elementary calculus is about infinitesimally small changes in the values

Original toplevel document

Calculus of variations - Wikipedia
l Line integral Surface integral Volume integral Jacobian Hessian matrix Specialized[hide] Fractional Malliavin Stochastic Variations Glossary of calculus[show] Glossary of calculus v t e <span>Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. [Note 1] Functionals are often expressed as definite integrals involving functions and their derivatives. Functions that maximize or minimize functionals may be found using the Euler–L

Flashcard 1744268561676

Tags
#calculus-of-variations
Question
In Calculus of variations functionals are mappings from [...] to the real numbers.
a set of functions

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
ead><head> Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. elementary calculus is about infinitesimally small changes in the values of functions without changes in the function itself, calculus of variations is about infinitesimally small

Original toplevel document

Calculus of variations - Wikipedia
l Line integral Surface integral Volume integral Jacobian Hessian matrix Specialized[hide] Fractional Malliavin Stochastic Variations Glossary of calculus[show] Glossary of calculus v t e <span>Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. [Note 1] Functionals are often expressed as definite integrals involving functions and their derivatives. Functions that maximize or minimize functionals may be found using the Euler–L

Flashcard 1744271183116

Tags
#calculus-of-variations
Question
elementary calculus is about [...] without changes in the function itself
infinitesimal changes in the values of functions

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
thematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. elementary calculus is about <span>infinitesimally small changes in the values of functions without changes in the function itself, calculus of variations is about infinitesimally small changes in the function itself, which are called variations. <span><body><html>

Original toplevel document

Calculus of variations - Wikipedia
l Line integral Surface integral Volume integral Jacobian Hessian matrix Specialized[hide] Fractional Malliavin Stochastic Variations Glossary of calculus[show] Glossary of calculus v t e <span>Calculus of variations is a field of mathematical analysis that uses variations, which are small changes in functions and functionals, to find maxima and minima of functionals, which are mappings from a set of functions to the real numbers. [Note 1] Functionals are often expressed as definite integrals involving functions and their derivatives. Functions that maximize or minimize functionals may be found using the Euler–L

Flashcard 1744273018124

Tags
#optimal-control
Question
Optimal control deals with the problem of finding [...] for a given system such that a certain optimality criterion is achieved.
a control law

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Optimal control deals with the problem of finding a control law for a given system such that a certain optimality criterion is achieved.

Original toplevel document

Optimal control - Wikipedia
1 General method 2 Linear quadratic control 3 Numerical methods for optimal control 4 Discrete-time optimal control 5 Examples 5.1 Finite time 6 See also 7 References 8 Further reading 9 External links General method[edit source] <span>Optimal control deals with the problem of finding a control law for a given system such that a certain optimality criterion is achieved. A control problem includes a cost functional that is a function of state and control variables. An optimal control is a set of differential equations describing the paths of the control

Flashcard 1744274590988

Tags
#optimal-control
Question
Optimal control finds a control law for a given system such that a certain [...] is achieved.
optimality criterion

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Optimal control deals with the problem of finding a control law for a given system such that a certain optimality criterion is achieved.

Original toplevel document

Optimal control - Wikipedia
1 General method 2 Linear quadratic control 3 Numerical methods for optimal control 4 Discrete-time optimal control 5 Examples 5.1 Finite time 6 See also 7 References 8 Further reading 9 External links General method[edit source] <span>Optimal control deals with the problem of finding a control law for a given system such that a certain optimality criterion is achieved. A control problem includes a cost functional that is a function of state and control variables. An optimal control is a set of differential equations describing the paths of the control

Flashcard 1744276163852

Tags
#logic
Question
The unifying themes in mathematical logic include the study of [...] and the deductive power of formal proof systems.
the expressive power of formal systems

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems.

Original toplevel document

Mathematical logic - Wikipedia
f mathematics). Mathematical logic is a subfield of mathematics exploring the applications of formal logic to mathematics. It bears close connections to metamathematics, the foundations of mathematics, and theoretical computer science. [1] <span>The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems. Mathematical logic is often divided into the fields of set theory, model theory, recursion theory, and proof theory. These areas share basic results on logic, particularly first-order

Flashcard 1744277736716

Tags
#logic
Question
The unifying themes in mathematical logic include the study of the expressive power of formal systems and [...].
the deductive power of formal proof systems

How does it relate to the inductive process of Bayesian reasoning?

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems.

Original toplevel document

Mathematical logic - Wikipedia
f mathematics). Mathematical logic is a subfield of mathematics exploring the applications of formal logic to mathematics. It bears close connections to metamathematics, the foundations of mathematics, and theoretical computer science. [1] <span>The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems. Mathematical logic is often divided into the fields of set theory, model theory, recursion theory, and proof theory. These areas share basic results on logic, particularly first-order

Flashcard 1744279309580

Tags
#logic
Question
The unifying themes in [...] include the study of the expressive power of formal systems and the deductive power of formal proof systems.
mathematical logic

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems.

Original toplevel document

Mathematical logic - Wikipedia
f mathematics). Mathematical logic is a subfield of mathematics exploring the applications of formal logic to mathematics. It bears close connections to metamathematics, the foundations of mathematics, and theoretical computer science. [1] <span>The unifying themes in mathematical logic include the study of the expressive power of formal systems and the deductive power of formal proof systems. Mathematical logic is often divided into the fields of set theory, model theory, recursion theory, and proof theory. These areas share basic results on logic, particularly first-order

Flashcard 1744282979596

Tags
#metric-space #topological-space
Question
In mathematics, a metric space is a set for which [...].
distances between all members of the set are defined

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In mathematics, a metric space is a set for which distances between all members of the set are defined. Those distances, taken together, are called a metric on the set. A metric on a space induces topological properties like open and closed sets, which lead to the study of more abstract

Original toplevel document

Metric space - Wikipedia
Metric space - Wikipedia Metric space From Wikipedia, the free encyclopedia Jump to: navigation, search In mathematics, a metric space is a set for which distances between all members of the set are defined. Those distances, taken together, are called a metric on the set. A metric on a space induces topological properties like open and closed sets, which lead to the study of more abstract topological spaces. The most familiar metric space is 3-dimensional Euclidean space. In fact, a "metric" is the generalization of the Euclidean metric arising from the four long-known propertie

Flashcard 1744285601036

Tags
#topology
Question
In a topological space, a closed set can be defined as a set which [...]
contains all its limit points.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In a topological space, a closed set can be defined as a set which contains all its limit points.

Original toplevel document

Closed set - Wikipedia
en set. For a set closed under an operation, see closure (mathematics). For other uses, see Closed (disambiguation). In geometry, topology, and related branches of mathematics, a closed set is a set whose complement is an open set. [1] [2] <span>In a topological space, a closed set can be defined as a set which contains all its limit points. In a complete metric space, a closed set is a set which is closed under the limit operation. Contents [hide] 1 Equivalent definitions of a closed set 2 Properties of closed

Flashcard 1744287173900

Tags
#topology
Question
a [...] can be defined as a set which contains all its limit points.
closed set

This set can be anything. For example, it can be the set of all measurable functions, so that by being closed it means the measurable function space contains all point wise sequence limit functions.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
In a topological space, a closed set can be defined as a set which contains all its limit points.

Original toplevel document

Closed set - Wikipedia
en set. For a set closed under an operation, see closure (mathematics). For other uses, see Closed (disambiguation). In geometry, topology, and related branches of mathematics, a closed set is a set whose complement is an open set. [1] [2] <span>In a topological space, a closed set can be defined as a set which contains all its limit points. In a complete metric space, a closed set is a set which is closed under the limit operation. Contents [hide] 1 Equivalent definitions of a closed set 2 Properties of closed

Flashcard 1744289533196

Tags
#lebesgue-integration
Question

a measurable simple function is [...description...]

a finite linear combination of indicator functions

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
A finite linear combination of indicator functions where the coefficients a k are real numbers and the sets S k are measurable, is called a measurable simple function.

Original toplevel document

Lebesgue integration - Wikipedia
μ = μ ( S ) . {\displaystyle \int 1_{S}\,\mathrm {d} \mu =\mu (S).} Notice that the result may be equal to +∞, unless μ is a finite measure. Simple functions: <span>A finite linear combination of indicator functions ∑ k a k 1 S k {\displaystyle \sum _{k}a_{k}1_{S_{k}}} where the coefficients a k are real numbers and the sets S k are measurable, is called a measurable simple function. We extend the integral by linearity to non-negative measurable simple functions. When the coefficients a k are non-negative, we set ∫ (

Flashcard 1744294251788

Tags
#lebesgue-integration
Question

To assign a value to [...], the only reasonable choice is to set:

the integral of the indicator function 1S of a measurable set S consistent with the given measure μ

Notice that the result may be equal to +∞ , unless μ is a finite measure.
Trick: just read the expression from left to right

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
To assign a value to the integral of the indicator function 1 S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set: Notice that the result may be equal to +∞ , unless μ is a finite measure.

Original toplevel document

Lebesgue integration - Wikipedia
x ) {\displaystyle \int _{E}f\,\mathrm {d} \mu =\int _{E}f\left(x\right)\,\mathrm {d} \mu \left(x\right)} for measurable real-valued functions f defined on E in stages: Indicator functions: <span>To assign a value to the integral of the indicator function 1 S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set: ∫ 1 S d μ = μ ( S ) . {\displaystyle \int 1_{S}\,\mathrm {d} \mu =\mu (S).} Notice that the result may be equal to +∞, unless μ is a finite measure. Simple functions: A finite linear combination of indicator functions ∑ k a

Flashcard 1744295824652

Tags
#lebesgue-integration
Question

To assign a value to the integral of the indicator function 1S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set [...]

Notice that the result may be equal to +∞ , unless μ is a finite measure.

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
To assign a value to the integral of the indicator function 1 S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set: Notice that the result may be equal to +∞ , unless μ is a finite measure.

Original toplevel document

Lebesgue integration - Wikipedia
x ) {\displaystyle \int _{E}f\,\mathrm {d} \mu =\int _{E}f\left(x\right)\,\mathrm {d} \mu \left(x\right)} for measurable real-valued functions f defined on E in stages: Indicator functions: <span>To assign a value to the integral of the indicator function 1 S of a measurable set S consistent with the given measure μ, the only reasonable choice is to set: ∫ 1 S d μ = μ ( S ) . {\displaystyle \int 1_{S}\,\mathrm {d} \mu =\mu (S).} Notice that the result may be equal to +∞, unless μ is a finite measure. Simple functions: A finite linear combination of indicator functions ∑ k a

Annotation 1744304475404

Credit Risk
#has-images #investopedia
Credit risk refers to the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it. Credit risk arises because borrowers expect to use future cash flows to pay current debts; it's almost never possible to ensure that borrowers will definitely have the funds to repay their debts. Interest payments from the borrower or issuer of a debt obligation are a lender's or investor's reward for assuming credit risk.

Credit Risk
What is 'Credit Risk' <span>Credit risk refers to the risk that a borrower may not repay a loan and that the lender may lose the principal of the loan or the interest associated with it. Credit risk arises because borrowers expect to use future cash flows to pay current debts; it's almost never possible to ensure that borrowers will definitely have the funds to repay their debts. Interest payments from the borrower or issuer of a debt obligation are a lender's or investor's reward for assuming credit risk. BREAKING DOWN 'Credit Risk' When lenders offer borrowers mortgages, credit cards or other types of loans, there is always an element of risk that the

Annotation 1744309456140

This reading covers basic principles of credit analysis, which may be broadly defined as the process by which credit risk is evaluated.

Parent (intermediate) annotation

Open it
This reading covers basic principles of credit analysis, which may be broadly defined as the process by which credit risk is evaluated. Readers will be introduced to the definition of credit risk, the interpretation of credit ratings, the four Cs of traditional credit analysis , and key financial measures and ratios us

Original toplevel document

Reading 55  Fundamentals of Credit Analysis (Intro)
With bonds outstanding worth many trillions of US dollars, the debt markets play a critical role in the global economy. Companies and governments raise capital in the debt market to fund current operations; buy equipment; build factories, roads, bridges, airports, and hospitals; acquire assets, and so on. By channeling savings into productive investments, the debt markets facilitate economic growth. Credit analysis has a crucial function in the debt capital markets—efficiently allocating capital by properly assessing credit risk, pricing it accordingly, and repricing it as risks change. How do fixed-income investors determine the riskiness of that debt, and how do they decide what they need to earn as compensation for that risk? This reading covers basic principles of credit analysis, which may be broadly defined as the process by which credit risk is evaluated. Readers will be introduced to the definition of credit risk, the interpretation of credit ratings, the four Cs of traditional credit analysis, and key financial measures and ratios used in credit analysis. The reading explains, among other things, how to compare bond issuer creditworthiness within a given industry as well as across industries and how credit risk is priced in the bond market. The reading focuses primarily on analysis of corporate debt; however, credit analysis of sovereign and non-sovereign, particularly municipal, government bonds will also be addressed. Structured finance, a segment of the debt markets that includes securities backed by pools of assets, such as residential and commercial mortgages as well as other consumer loans, will not be covered here. The key components of credit risk—default probability and loss severity—are introduced in the next section along with such credit-related risks as spread risk, credit migra

Annotation 1744311029004

Readers will be introduced to the definition of credit risk, the interpretation of credit ratings, the four Cs of traditional credit analysis, and key financial measures and ratios used in credit analysis. The reading explains, among other things, how to compare bond issuer creditworthiness within a given industry as well as across industries and how credit risk is priced in the bond market.

Parent (intermediate) annotation

Open it
This reading covers basic principles of credit analysis, which may be broadly defined as the process by which credit risk is evaluated. Readers will be introduced to the definition of credit risk, the interpretation of credit ratings, the four Cs of traditional credit analysis , and key financial measures and ratios used in credit analysis. The reading explains, among other things, how to compare bond issuer creditworthiness within a given industry as well as across industries and how credit risk is priced in the bond market.

Original toplevel document

Reading 55  Fundamentals of Credit Analysis (Intro)
With bonds outstanding worth many trillions of US dollars, the debt markets play a critical role in the global economy. Companies and governments raise capital in the debt market to fund current operations; buy equipment; build factories, roads, bridges, airports, and hospitals; acquire assets, and so on. By channeling savings into productive investments, the debt markets facilitate economic growth. Credit analysis has a crucial function in the debt capital markets—efficiently allocating capital by properly assessing credit risk, pricing it accordingly, and repricing it as risks change. How do fixed-income investors determine the riskiness of that debt, and how do they decide what they need to earn as compensation for that risk? This reading covers basic principles of credit analysis, which may be broadly defined as the process by which credit risk is evaluated. Readers will be introduced to the definition of credit risk, the interpretation of credit ratings, the four Cs of traditional credit analysis, and key financial measures and ratios used in credit analysis. The reading explains, among other things, how to compare bond issuer creditworthiness within a given industry as well as across industries and how credit risk is priced in the bond market. The reading focuses primarily on analysis of corporate debt; however, credit analysis of sovereign and non-sovereign, particularly municipal, government bonds will also be addressed. Structured finance, a segment of the debt markets that includes securities backed by pools of assets, such as residential and commercial mortgages as well as other consumer loans, will not be covered here. The key components of credit risk—default probability and loss severity—are introduced in the next section along with such credit-related risks as spread risk, credit migra

Annotation 1744312864012

Hypothesis testing is part of statistical inference, the process of making judgments about a larger group (a population) on the basis of a smaller group actually observed (a sample).

Parent (intermediate) annotation

Open it
Hypothesis testing is part of statistical inference, the process of making judgments about a larger group (a population) on the basis of a smaller group actually observed (a sample). The concepts and tools of hypothesis testing provide an objective means to gauge whether the available evidence supports the hypothesis. After a statistical test of a hypothesis we shou

Annotation 1744314436876

The concepts and tools of hypothesis testing provide an objective means to measure whether the available evidence supports the hypothesis. After a statistical test of a hypothesis we should have a clearer idea of the probability that a hypothesis is true or not, although our conclusion always stops short of certainty. Hypothesis testing has been a powerful tool in the advancement of investment knowledge and science.

Parent (intermediate) annotation

Open it
Hypothesis testing is part of statistical inference, the process of making judgments about a larger group (a population) on the basis of a smaller group actually observed (a sample). The concepts and tools of hypothesis testing provide an objective means to gauge whether the available evidence supports the hypothesis. After a statistical test of a hypothesis we should have a clearer idea of the probability that a hypothesis is true or not, although our conclusion always stops short of certainty. Hypothesis testing has been a powerful tool in the advancement of investment knowledge and science. As Robert L. Kahn of the Institute for Social Research (Ann Arbor, Michigan) has written, “The mill of science grinds only when hypothesis and data are in continuous and abrasive contac

Flashcard 1744316796172

Tags
Question
Government policy is ultimately expressed through [...] .
its borrowing and spending activities

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Government policy is ultimately expressed through its borrowing and spending activities. In this reading, we identify and discuss two types of government policy that can affect the macroeconomy and financial markets: monetary policy and fiscal policy.

Original toplevel document

Reading 18  Monetary and Fiscal Policy Introduction
The economic decisions of households can have a significant impact on an economy. For example, a decision on the part of households to consume more and to save less can lead to an increase in employment, investment, and ultimately profits. Equally, the investment decisions made by corporations can have an important impact on the real economy and on corporate profits. But individual corporations can rarely affect large economies on their own; the decisions of a single household concerning consumption will have a negligible impact on the wider economy. By contrast, the decisions made by governments can have an enormous impact on even the largest and most developed of economies for two main reasons. First, the public sectors of most developed economies normally employ a significant proportion of the population, and they are usually responsible for a significant proportion of spending in an economy. Second, governments are also the largest borrowers in world debt markets. Exhibit 1 gives some idea of the scale of government borrowing and spending. Exhibit 1 Panel A. Central Government Debt to GDP, 2009 Panel B. Public Sector Spending to GDP, 2009 Note: All data are for 2009. Source: Thomson Financial. Government policy is ultimately expressed through its borrowing and spending activities. In this reading, we identify and discuss two types of government policy that can affect the macroeconomy and financial markets: monetary policy and fiscal policy. Monetary policy refers to central bank activities that are directed toward influencing the quantity of money and credit in an economy.1 By contrast, fiscal policy refers to the government’s decisions about taxation and spending. Both monetary and fiscal policies are used to regulate economic activity over time. They can be used to accelerate growth when an economy starts to slow or to moderate growth and activity when an economy starts to overheat. In addition, fiscal policy can be used to redistribute income and wealth. The overarching goal of both monetary and fiscal policy is normally the creation of an economic environment where growth is stable and positive and inflation is stable and low. Crucially, the aim is therefore to steer the underlying economy so that it does not experience economic booms that may be followed by extended periods of low or negative growth and high levels of unemployment. In such a stable economic environment, householders can feel secure in their consumption and saving decisions, while corporations can concentrate on their investment decisions, on making their regular coupon payments to their bond holders and on making profits for their shareholders. The challenges to achieving this overarching goal are many. Not only are economies frequently buffeted by shocks (such as oil price jumps), but some economists believe that natural cycles in the economy also exist. Moreover, there are plenty of examples from history where government policies—either monetary, fiscal, or both—have exacerbated an economic expansion that eventually led to damaging consequences for the real economy, for financial markets, and for investors. The balance of the reading is organized as follows. Section 2 provides an introduction to monetary policy and related topics. Section 3 presents fiscal policy. The interact

Annotation 1744319155468

Section 2 describes the risk management process.

Parent (intermediate) annotation

Open it
This reading is organized along the lines of these questions. Section 2 describes the risk management process. Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks. Section 5 addresses the measurement and ma

Original toplevel document

Reading 40  Risk Management: An Introduction Intro
The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following: <span>What is risk management, and why is it important? What risks does an organization (or individual) face in pursuing its objectives? How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results? How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities? How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks? The answers to these questions collectively help to define the process of risk management. This reading is organized along the lines of these questions. Section 2 describes the risk management process, and Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks, and Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <span><body><html>

Annotation 1744320728332

Section 3 discusses risk governance and risk tolerance.

Parent (intermediate) annotation

Open it
This reading is organized along the lines of these questions. Section 2 describes the risk management process. Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks. Section 5 addresses the measurement and management of risks. Section 6 provides a summary.

Original toplevel document

Reading 40  Risk Management: An Introduction Intro
The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following: <span>What is risk management, and why is it important? What risks does an organization (or individual) face in pursuing its objectives? How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results? How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities? How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks? The answers to these questions collectively help to define the process of risk management. This reading is organized along the lines of these questions. Section 2 describes the risk management process, and Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks, and Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <span><body><html>

Annotation 1744322301196

Section 4 covers the identification of various risks.

Parent (intermediate) annotation

Open it
ead> This reading is organized along the lines of these questions. Section 2 describes the risk management process. Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks. Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <html>

Original toplevel document

Reading 40  Risk Management: An Introduction Intro
The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following: <span>What is risk management, and why is it important? What risks does an organization (or individual) face in pursuing its objectives? How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results? How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities? How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks? The answers to these questions collectively help to define the process of risk management. This reading is organized along the lines of these questions. Section 2 describes the risk management process, and Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks, and Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <span><body><html>

Annotation 1744323874060

Section 5 addresses the measurement and management of risks.

Parent (intermediate) annotation

Open it
zed along the lines of these questions. Section 2 describes the risk management process. Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks. <span>Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <span><body><html>

Original toplevel document

Reading 40  Risk Management: An Introduction Intro
The fact that all businesses and investors engage in risky activities (i.e., activities with uncertain outcomes) raises a number of important questions. The questions that this reading will address include the following: <span>What is risk management, and why is it important? What risks does an organization (or individual) face in pursuing its objectives? How are an entity’s goals affected by risk, and how does it make risk management decisions to produce better results? How does risk governance guide the risk management process and risk budgeting to integrate an organization’s goals with its activities? How does an organization measure and evaluate the risks it faces, and what tools does it have to address these risks? The answers to these questions collectively help to define the process of risk management. This reading is organized along the lines of these questions. Section 2 describes the risk management process, and Section 3 discusses risk governance and risk tolerance. Section 4 covers the identification of various risks, and Section 5 addresses the measurement and management of risks. Section 6 provides a summary. <span><body><html>

Annotation 1744326495500

In portfolio management Fixed-income securities are a way by which investors can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations.

Parent (intermediate) annotation

Open it
In portfolio management Fixed-income securities are a way by which investors can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of o

Original toplevel document

Reading 50  Fixed-Income Securities: Defining Elements (Intro)
Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares. In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. Among the questions this reading addresses are the following: What set of features define a fixed-income security, and how do these features determine the scheduled cash flows? What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors? What are the common structures regarding the payment of interest and repayment of principal? What types of provisions may affect the disposal or redemption of fixed-income securities? Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1 The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Sectio

Annotation 1744328068364

The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits.

Parent (intermediate) annotation

Open it
span> In portfolio management Fixed-income securities are a way by which investors can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. <span><body><html>

Original toplevel document

Reading 50  Fixed-Income Securities: Defining Elements (Intro)
Judged by total market value, fixed-income securities constitute the most prevalent means of raising capital globally. A fixed-income security is an instrument that allows governments, companies, and other types of issuers to borrow money from investors. Any borrowing of money is debt. The promised payments on fixed-income securities are, in general, contractual (legal) obligations of the issuer to the investor. For companies, fixed-income securities contrast to common shares in not having ownership rights. Payment of interest and repayment of principal (amount borrowed) are a prior claim on the company’s earnings and assets compared with the claim of common shareholders. Thus, a company’s fixed-income securities have, in theory, lower risk than that company’s common shares. In portfolio management, fixed-income securities fulfill several important roles. They are a prime means by which investors—individual and institutional—can prepare to fund, with some degree of safety, known future obligations such as tuition payments or pension obligations. The correlations of fixed-income securities with common shares vary, but adding fixed-income securities to portfolios including common shares is usually an effective way of obtaining diversification benefits. Among the questions this reading addresses are the following: What set of features define a fixed-income security, and how do these features determine the scheduled cash flows? What are the legal, regulatory, and tax considerations associated with a fixed-income security, and why are these considerations important for investors? What are the common structures regarding the payment of interest and repayment of principal? What types of provisions may affect the disposal or redemption of fixed-income securities? Embarking on the study of fixed-income securities, please note that the terms “fixed-income securities,” “debt securities,” and “bonds” are often used interchangeably by experts and non-experts alike. We will also follow this convention, and where any nuance of meaning is intended, it will be made clear.1 The remainder of this reading is organized as follows. Section 2 describes, in broad terms, what an investor needs to know when investing in fixed-income securities. Sectio

Annotation 1744330165516

Representative Accounts
: Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate.

Parent (intermediate) annotation

Open it
Misleading practices included: Representative Accounts : Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias : Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. &#1

Original toplevel document

Reading 4  Introduction to the Global Investment Performance Standards (GIPS®)
nvestment performance data. Several performance measurement practices hindered the comparability of performance returns from one firm to another, while others called into question the accuracy and credibility of performance reporting overall. <span>Misleading practices included: Representative Accounts: Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias: Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. Varying Time Periods: Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible. Making a valid comparison of investment performance among even the most ethical investment management firms was problematic. For example, a pension fund seeking to

Annotation 1744333311244

Survivorship Bias : Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm.

Parent (intermediate) annotation

Open it
ody> Misleading practices included: Representative Accounts : Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias : Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. Varying Time Periods : Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making compar

Original toplevel document

Reading 4  Introduction to the Global Investment Performance Standards (GIPS®)
nvestment performance data. Several performance measurement practices hindered the comparability of performance returns from one firm to another, while others called into question the accuracy and credibility of performance reporting overall. <span>Misleading practices included: Representative Accounts: Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias: Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. Varying Time Periods: Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible. Making a valid comparison of investment performance among even the most ethical investment management firms was problematic. For example, a pension fund seeking to

Annotation 1744339078412

Varying Time Periods : Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible.

Parent (intermediate) annotation

Open it
l investment results for a specific mandate. Survivorship Bias : Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. <span>Varying Time Periods : Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible. <span><body><html>

Original toplevel document

Reading 4  Introduction to the Global Investment Performance Standards (GIPS®)
nvestment performance data. Several performance measurement practices hindered the comparability of performance returns from one firm to another, while others called into question the accuracy and credibility of performance reporting overall. <span>Misleading practices included: Representative Accounts: Selecting a top-performing portfolio to represent the firm’s overall investment results for a specific mandate. Survivorship Bias: Presenting an “average” performance history that excludes portfolios whose poor performance was weak enough to result in termination of the firm. Varying Time Periods: Presenting performance for a selected time period during which the mandate produced excellent returns or out-performed its benchmark—making comparison with other firms’ results difficult or impossible. Making a valid comparison of investment performance among even the most ethical investment management firms was problematic. For example, a pension fund seeking to

Annotation 1744341961996

Measured by daily turnover, the foreign exchange (FX) market—the market in which currencies are traded against each other—is by far the world’s largest market.

Parent (intermediate) annotation

Open it
Measured by daily turnover, the foreign exchange (FX) market—the market in which currencies are traded against each other—is by far the world’s largest market. Current estimates put daily turnover at approximately USD4 trillion for 2010. This is about 10 to 15 times larger than daily turnover in global fixed-income markets and about 50 times l

Original toplevel document

Reading 20  Currency Exchange Rates Introduction

Annotation 1744343534860

Current estimates put daily turnover at approximately USD4 trillion for 2010. This is about 10 to 15 times larger than daily turnover in global fixed-income markets and about 50 times larger than global turnover in equities.

Parent (intermediate) annotation

Open it
Measured by daily turnover, the foreign exchange (FX) market—the market in which currencies are traded against each other—is by far the world’s largest market. Current estimates put daily turnover at approximately USD4 trillion for 2010. This is about 10 to 15 times larger than daily turnover in global fixed-income markets and about 50 times larger than global turnover in equities. Moreover, volumes in FX turnover continue to grow: Some predict that daily FX turnover will reach USD10 trillion by 2020 as market participation spreads and deepens. </spa

Original toplevel document

Reading 20  Currency Exchange Rates Introduction

Annotation 1744345107724

volumes in FX turnover continue to grow: Some predict that daily FX turnover will reach USD10 trillion by 2020 as market participation spreads and deepens.

Parent (intermediate) annotation

Open it
market. Current estimates put daily turnover at approximately USD4 trillion for 2010. This is about 10 to 15 times larger than daily turnover in global fixed-income markets and about 50 times larger than global turnover in equities. Moreover, <span>volumes in FX turnover continue to grow: Some predict that daily FX turnover will reach USD10 trillion by 2020 as market participation spreads and deepens. <span><body><html>

Original toplevel document

Reading 20  Currency Exchange Rates Introduction

Annotation 1744348777740

Cost of capital estimation is a challenging task. The cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates.

Parent (intermediate) annotation

Open it
Cost of capital estimation is a challenging task. The cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash

Original toplevel document

Reading 36  Cost of Capital Introduction
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat

Annotation 1744350350604

A challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital.

Parent (intermediate) annotation

Open it
body> Cost of capital estimation is a challenging task. The cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this ov

Original toplevel document

Reading 36  Cost of Capital Introduction
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat

Annotation 1744352709900

You often estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital to reflect the risk of the project relative to the company’s average project.

Parent (intermediate) annotation

Open it
s and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. <span>In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. <span><body><html>

Original toplevel document

Reading 36  Cost of Capital Introduction
A company grows by making investments that are expected to increase revenues and profits. The company acquires the capital or funds necessary to make such investments by borrowing or using funds from owners. By applying this capital to investments with long-term benefits, the company is producing value today. But, how much value? The answer depends not only on the investments’ expected future cash flows but also on the cost of the funds. Borrowing is not costless. Neither is using owners’ funds. The cost of this capital is an important ingredient in both investment decision making by the company’s management and the valuation of the company by investors. If a company invests in projects that produce a return in excess of the cost of capital, the company has created value; in contrast, if the company invests in projects whose returns are less than the cost of capital, the company has actually destroyed value. Therefore, the estimation of the cost of capital is a central issue in corporate financial management. For the analyst seeking to evaluate a company’s investment program and its competitive position, an accurate estimate of a company’s cost of capital is important as well. Cost of capital estimation is a challenging task. As we have already implied, the cost of capital is not observable but, rather, must be estimated. Arriving at a cost of capital estimate requires a host of assumptions and estimates. Another challenge is that the cost of capital that is appropriately applied to a specific investment depends on the characteristics of that investment: The riskier the investment’s cash flows, the greater its cost of capital. In reality, a company must estimate project-specific costs of capital. What is often done, however, is to estimate the cost of capital for the company as a whole and then adjust this overall corporate cost of capital upward or downward to reflect the risk of the contemplated project relative to the company’s average project. This reading is organized as follows: In the next section, we introduce the cost of capital and its basic computation. Section 3 presents a selection of methods for estimat

Annotation 1744354282764

For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes.

Parent (intermediate) annotation

Open it
For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounti

Original toplevel document

For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes. Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading. Differences between how and when transactions are recognized for financial reporting purposes relative to tax reporting can give rise to differences in tax expense and related tax assets and liabilities. To reconcile these differences, companies that report under either IFRS or US GAAP create a provision on the balance sheet called deferred tax assets or deferred tax liabilities, depending on the nature of the situation. Deferred tax assets or liabilities usually arise when accounting standards and tax authorities recognize the timing of revenues and expenses at different times. Because timing differences such as these will eventually reverse over time, they are called “temporary differences.” Deferred tax assets represent taxes that have been recognized for tax reporting purposes (or often the carrying forward of losses from previous periods) but have not yet been recognized on the income statement prepared for financial reporting purposes. Deferred tax liabilities represent tax expense that has appeared on the income statement for financial reporting purposes, but has not yet become payable under tax regulations. This reading provides a primer on the basics of income tax accounting and reporting. The reading is organized as follows. Section 2 describes the differences between taxabl

Annotation 1744356117772

For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes.

Parent (intermediate) annotation

Open it
ad><head> For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes. Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading. <html>

Original toplevel document

For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes. Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading. Differences between how and when transactions are recognized for financial reporting purposes relative to tax reporting can give rise to differences in tax expense and related tax assets and liabilities. To reconcile these differences, companies that report under either IFRS or US GAAP create a provision on the balance sheet called deferred tax assets or deferred tax liabilities, depending on the nature of the situation. Deferred tax assets or liabilities usually arise when accounting standards and tax authorities recognize the timing of revenues and expenses at different times. Because timing differences such as these will eventually reverse over time, they are called “temporary differences.” Deferred tax assets represent taxes that have been recognized for tax reporting purposes (or often the carrying forward of losses from previous periods) but have not yet been recognized on the income statement prepared for financial reporting purposes. Deferred tax liabilities represent tax expense that has appeared on the income statement for financial reporting purposes, but has not yet become payable under tax regulations. This reading provides a primer on the basics of income tax accounting and reporting. The reading is organized as follows. Section 2 describes the differences between taxabl

Annotation 1744357690636

Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading.

Parent (intermediate) annotation

Open it
and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes. <span>Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading. <span><body><html>

Original toplevel document

For those companies reporting under International Financial Reporting Standards (IFRS), IAS 12 [Income Taxes] covers accounting for a company's income taxes and the reporting of deferred taxes. For those companies reporting under United States generally accepted accounting principles (US GAAP), FASB ASC Topic 740 [Income Taxes] is the primary source for information on accounting for income taxes. Although IFRS and US GAAP follow similar conventions on many income tax issues, there are some key differences that will be discussed in the reading. Differences between how and when transactions are recognized for financial reporting purposes relative to tax reporting can give rise to differences in tax expense and related tax assets and liabilities. To reconcile these differences, companies that report under either IFRS or US GAAP create a provision on the balance sheet called deferred tax assets or deferred tax liabilities, depending on the nature of the situation. Deferred tax assets or liabilities usually arise when accounting standards and tax authorities recognize the timing of revenues and expenses at different times. Because timing differences such as these will eventually reverse over time, they are called “temporary differences.” Deferred tax assets represent taxes that have been recognized for tax reporting purposes (or often the carrying forward of losses from previous periods) but have not yet been recognized on the income statement prepared for financial reporting purposes. Deferred tax liabilities represent tax expense that has appeared on the income statement for financial reporting purposes, but has not yet become payable under tax regulations. This reading provides a primer on the basics of income tax accounting and reporting. The reading is organized as follows. Section 2 describes the differences between taxabl

Flashcard 1744359263500

Tags
Question
Market efficiency concerns the extent to which [...] .
market prices incorporate available information

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency i

Original toplevel document

Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers, as illustrated in Example 1. EXAMPLE 1 Market Efficiency and Active Manager Selection The chief investment officer (CIO) of a major university endowment fund has listed eight steps in the active manager selection process that can be applied both to traditional investments (e.g., common equity and fixed-income securities) and to alternative investments (e.g., private equity, hedge funds, and real assets). The first step specified is the evaluation of market opportunity: What is the opportunity and why is it there? To answer this question we start by studying capital markets and the types of managers operating within those markets. We identify market inefficiencies and try to understand their causes, such as regulatory structures or behavioral biases. We can rule out many broad groups of managers and strategies by simply determining that the degree of market inefficiency necessary to support a strategy is implausible. Importantly, we consider the past history of active returns meaningless unless we understand why markets will allow those active returns to continue into the future.1 The CIO’s description underscores the importance of not assuming that past active returns that might be found in a historical dataset will repeat themselves in the future. Active returns refer to returns earned by strategies that do not assume that all information is fully reflected in market prices. Governments and market regulators also care about the extent to which market prices incorporate information. Efficient markets imply informative prices—prices that accurately reflect available information about fundamental values. In market-based economies, market prices help determine which companies (and which projects) obtain capital. If these prices do not efficiently incorporate information about a company’s prospects, then it is possible that funds will be misdirected. By contrast, prices that are informative help direct scarce resources and funds available for investment to their highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system. The remainder of this reading is organized as follows. Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affectin

Annotation 1744361622796

If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers

Parent (intermediate) annotation

Open it
Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers

Original toplevel document

Market efficiency concerns the extent to which market prices incorporate available information. If market prices do not fully incorporate information, then opportunities may exist to make a profit from the gathering and processing of information. The subject of market efficiency is, therefore, of great interest to investment managers, as illustrated in Example 1. EXAMPLE 1 Market Efficiency and Active Manager Selection The chief investment officer (CIO) of a major university endowment fund has listed eight steps in the active manager selection process that can be applied both to traditional investments (e.g., common equity and fixed-income securities) and to alternative investments (e.g., private equity, hedge funds, and real assets). The first step specified is the evaluation of market opportunity: What is the opportunity and why is it there? To answer this question we start by studying capital markets and the types of managers operating within those markets. We identify market inefficiencies and try to understand their causes, such as regulatory structures or behavioral biases. We can rule out many broad groups of managers and strategies by simply determining that the degree of market inefficiency necessary to support a strategy is implausible. Importantly, we consider the past history of active returns meaningless unless we understand why markets will allow those active returns to continue into the future.1 The CIO’s description underscores the importance of not assuming that past active returns that might be found in a historical dataset will repeat themselves in the future. Active returns refer to returns earned by strategies that do not assume that all information is fully reflected in market prices. Governments and market regulators also care about the extent to which market prices incorporate information. Efficient markets imply informative prices—prices that accurately reflect available information about fundamental values. In market-based economies, market prices help determine which companies (and which projects) obtain capital. If these prices do not efficiently incorporate information about a company’s prospects, then it is possible that funds will be misdirected. By contrast, prices that are informative help direct scarce resources and funds available for investment to their highest-valued uses.2 Informative prices thus promote economic growth. The efficiency of a country’s capital markets (in which businesses raise financing) is an important characteristic of a well-functioning financial system. The remainder of this reading is organized as follows. Section 2 provides specifics on how the efficiency of an asset market is described and discusses the factors affectin

Annotation 1744363719948

By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply.

Parent (intermediate) annotation

Open it
By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. I

Original toplevel document

Prerequisite Demand and Supply Analysis: Consumer Demand
By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded some very powerful implications about how markets work, but we can delve even more deeply to explore the underpinnings of demand and supply. In this reading, we examine the theory of the consumer as a way of understanding where consumer demand curves originate. In a subsequent reading, the origins of the supply curve are sought in presenting the theory of the firm. This reading is organized as follows: Section 2 describes consumer choice theory in more detail. Section 3 introduces utility theory, a building block

Annotation 1744365292812

as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness.

Parent (intermediate) annotation

Open it
By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded som

Original toplevel document

Prerequisite Demand and Supply Analysis: Consumer Demand
By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded some very powerful implications about how markets work, but we can delve even more deeply to explore the underpinnings of demand and supply. In this reading, we examine the theory of the consumer as a way of understanding where consumer demand curves originate. In a subsequent reading, the origins of the supply curve are sought in presenting the theory of the firm. This reading is organized as follows: Section 2 describes consumer choice theory in more detail. Section 3 introduces utility theory, a building block

Annotation 1744366865676

In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded some very powerful implications about how markets work, but we can delve even more deeply to explore the underpinnings of demand and supply. In this reading, we examine the theory of the consumer as a way of understanding where consumer demand curves originate. In a subsequent reading, the origins of the supply curve are sought in presenting the theory of the firm.

Parent (intermediate) annotation

Open it
r most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. <span>In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded some very powerful implications about how markets work, but we can delve even more deeply to explore the underpinnings of demand and supply. In this reading, we examine the theory of the consumer as a way of understanding where consumer demand curves originate. In a subsequent reading, the origins of the supply curve are sought in presenting the theory of the firm. <span><body><html>

Original toplevel document

Prerequisite Demand and Supply Analysis: Consumer Demand
By now it should be clear that economists are model builders. In the previous reading, we examined one of their most fundamental models, the model of demand and supply. And as we have seen, models begin with simplifying assumptions and then find the implications that can then be compared to real-world observations as a test of the model’s usefulness. In the model of demand and supply, we assumed the existence of a demand curve and a supply curve, as well as their respective negative and positive slopes. That simple model yielded some very powerful implications about how markets work, but we can delve even more deeply to explore the underpinnings of demand and supply. In this reading, we examine the theory of the consumer as a way of understanding where consumer demand curves originate. In a subsequent reading, the origins of the supply curve are sought in presenting the theory of the firm. This reading is organized as follows: Section 2 describes consumer choice theory in more detail. Section 3 introduces utility theory, a building block

Flashcard 1744368438540

Tags
Question
What is the central pillar of governance Structure?
A board of directors is the central pillar of the governance structure

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company.

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Flashcard 1744375254284

Tags
Question
[...] directors are employed by the company and are typically members of senior management.
Executive (internal)

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an import

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Annotation 1744377613580

Non-executive (external)

Parent (intermediate) annotation

Open it
Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role.

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Flashcard 1744379186444

Tags
Question
[...] directors have limited involvement in daily operations but serve an important oversight role.
Non-executive (external)

status measured difficulty not learned 37% [default] 0

Parent (intermediate) annotation

Open it
Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role.

Original toplevel document

Subject 5. Board of Directors and Committees
Composition of the Board of Directors A board of directors is the central pillar of the governance structure, serves as the link between shareholders and managers, and acts as the shareholders' internal monitoring tool within the company. The structure and composition of a board of directors vary across countries and companies. The number of directors may vary, and the board typically includes a mix of expertise levels, backgrounds, and competencies. Board members must have extensive experience in business, education, the professions and/or public service so they can make informed decisions about the company's future. If directors lack the skills, knowledge and expertise to conduct a meaningful review of the company's activities, and are unable to conduct in-depth evaluations of the issues affecting the company's business, they are more likely to defer to management when making decisions. Executive (internal) directors are employed by the company and are typically members of senior management. Non-executive (external) directors have limited involvement in daily operations but serve an important oversight role. In a classified or staggered board, directors are typically elected in two or more classes, serving terms greater than one year. Proponents argue that by staggering the election of directors, a certain level of continuity and skill is maintained. However, staggered terms make it more difficult for shareholders to make fundamental changes to the composition and behavior of the board and could result in a permanent impairment of long-term shareholder value. Functions and Responsibilities of the Board Two primary duties of a board of directors are duty of care and duty of loyalty. Among other responsibilities, the

Annotation 1744385477900

#investopedia
Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered.

Parent (intermediate) annotation

Open it
ular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee). <span>Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered. <span><body><html>

Original toplevel document

Classified Board
DEFINITION of 'Classified Board' <span>A structure for a board of directors in which a portion of the directors serve for different term lengths, depending on their particular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee). Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered. BREAKING DOWN 'Classified Board' The classified board structure features continuity of direction and preservation of skill, but has come under

Annotation 1744388361484

Staggered Board
#investopedia

A staggered board consists of a board of directors whose members are grouped into classes; for example, Class 1, Class 2, Class 3, etc. Each class represents a certain percentage of the total number of board positions. For example, a class is commonly comprised on one-third of the total board members. During each election term only one class is open to elections, thereby staggering the board directorship.

Staggered Board
[imagelink] DEFINITION of '<span>Staggered Board' A staggered board consists of a board of directors whose members are grouped into classes; for example, Class 1, Class 2, Class 3, etc. Each class represents a certain percentage of the total number of board positions. For example, a class is commonly comprised on one-third of the total board members. During each election term only one class is open to elections, thereby staggering the board directorship. BREAKING DOWN 'Staggered Board' A staggered board is also known as a classified board because of the different "classes" involved. A

Annotation 1744392031500

Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position.

Parent (intermediate) annotation

Open it
Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several

Original toplevel document

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors. Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. Non-Market Factors These factors include the legal environment, the media, and the corporate governance industry itself.

Annotation 1744396487948

Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management.

Parent (intermediate) annotation

Open it
ts shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. <span>Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover

Original toplevel document

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors. Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. Non-Market Factors These factors include the legal environment, the media, and the corporate governance industry itself.

Annotation 1744400944396

Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders.

Parent (intermediate) annotation

Open it
es that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. <span>Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. <span><body><html>

Original toplevel document

Subject 6. Factors Affecting Stakeholder Relationships and Corporate Governance
Stakeholder relationships and corporate governance are continually shaped and influenced by a variety of market and non-market factors. Market Factors Shareholder engagement involves a company's interactions with its shareholders. It can provide benefits that include building support against short-term activist investors, countering negative recommendations from proxy advisory firms, and receiving greater support for management's position. Shareholder activism encompasses a range of strategies that may be used by shareholders seeking to compel a company to act in a desired manner. It can take any of several forms: proxy battles, public campaigns, shareholder resolutions, litigation, and negotiations with management. Corporate takeovers can happen in different ways: proxy contest or proxy fight, tender offer, hostile takeover, etc. The justification for the use of various anti-takeover defenses should rest on the support of the majority of shareholders and on the demonstration that preservation of the integrity of the company is in the long-term interests of shareholders. Non-Market Factors These factors include the legal environment, the media, and the corporate governance industry itself.

Annotation 1744421391628

2. Monetary Policy
As stated above, monetary policy refers to government or central bank activities that are directed toward influencing the quantity of money and credit in an economy. Before we can begin to understand how monetary policy is implemented, we must examine the functions and role of money. We can then explore the special role that central banks play in today’s economies.

Annotation 1744423226636

Monetary policy refers to government or central bank activities that are directed toward influencing the quantity of money and credit in an economy.

2. Monetary Policy
As stated above, monetary policy refers to government or central bank activities that are directed toward influencing the quantity of money and credit in an economy. Before we can begin to understand how monetary policy is implemented, we must examine the functions and role of money . We can then explore the special role that central banks play i

Annotation 1744426896652

Before we can begin to understand how monetary policy is implemented, we must examine the functions and role of money . We can then explore the special role that central banks play in today’s economies.

2. Monetary Policy
As stated above, monetary policy refers to government or central bank activities that are directed toward influencing the quantity of money and credit in an economy. Before we can begin to understand how monetary policy is implemented, we must examine the functions and role of money . We can then explore the special role that central banks play in today’s economies.

Annotation 1744428469516

Money
A generally accepted medium of exchange and unit of account.

Annotation 1744430828812

Money
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy. There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants. It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple.

2.1.1. The Functions of Money

The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants.

However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must:

2. have a known value,

3. be easily divisible,

4. have a high value relative to its weight, and

5. be difficult to counterfeit.

Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii).

Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently a

...

Annotation 1744431353100

Informally, as mentioned earlier, a process is a program in execution. A process is more than the program code, which is sometimes known as the text section. It also includes the current activity, as represented by the value of the program counter and the contents of the processor’s registers. A process generally also includes the process stack, which contains temporary data (such as function parameters, return addresses, and local variables), and a data section, which contains global variables. A process may also include a heap, which is memory that is dynamically allocated during process run time.

pdf

cannot see any pdfs

Annotation 1744434236684

Money
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants . It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple.

Money
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants . It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. 2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is an

Annotation 1744436071692

A process may be in one of the following states: • New. The process is being created. • Running. Instructions are being executed. • Waiting. The process is waiting for some event to occur (such as an I/O completion or reception of a signal). • Ready. The process is waiting to be assigned to a processor. • Terminated. The process has ﬁnished execution

pdf

cannot see any pdfs

Annotation 1744442101004

To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy .

Parent (intermediate) annotation

Open it
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is s

Original toplevel document

Money
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants . It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. 2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is an

Annotation 1744446819596

There are many drawbacks to a barter economy.

First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a
double coincidence of wants .

It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy.

Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner.

Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges.

A barter economy has no common measure of value that would make multiple transactions simple.

Parent (intermediate) annotation

Open it
any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . <span>There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants . It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span><body><html>

Original toplevel document

Money
To understand the nature, role, and development of money in modern economies, it is useful to think about a world without money—where to purchase any good or service, an individual would have to “pay” with another good or service. An economy where such economic agents as households, corporations, and even governments pay for goods and services in this way is known as a barter economy . There are many drawbacks to such an economy. First, the exchange of goods for other goods (or services) would require both economic agents in the transaction to want what the other is selling. This means that there has to be a double coincidence of wants . It might also be impossible to undertake transactions where the goods are indivisible—that is, where one agent wishes to buy a certain amount of another’s goods, but that agent only has one indivisible unit of another good that is worth more than the good that the agent is trying to buy. Another problem occurs if economic agents do not wish to exchange all of their goods on other goods and services. This may not be a problem, however, when the goods they have to sell can be stored safely so that they retain their value for the future. But if these goods are perishable, they will not be able to store value for their owner. Finally, in a barter economy, there are many measures of value: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. 2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is an

Annotation 1744449441036

2.1.1. The Functions of Money
#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten

The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants.

However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must:

2. have a known value,

3. be easily divisible,

4. have a high value relative to its weight, and

5. be difficult to counterfeit.

Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii).

Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited.

Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange.

Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary

...

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744451800332

#functions-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants.

Parent (intermediate) annotation

Open it
The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, hav

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744456256780

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten

for money to act as this liberating medium of exchange, it must possess certain qualities. It must:

2. have a known value,

3. be easily divisible,

4. have a high value relative to its weight, and

5. be difficult to counterfeit.

Parent (intermediate) annotation

Open it
stead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, <span>for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), the

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744457829644

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease.

Parent (intermediate) annotation

Open it
13; have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; <span>the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exch

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744459402508

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited

Parent (intermediate) annotation

Open it
f the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). <span>Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of mone

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744461237516

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange.

Parent (intermediate) annotation

Open it
l functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. <span>Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744463072524

Diagram of process state.

pdf

cannot see any pdfs

Annotation 1744464645388

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged.

Parent (intermediate) annotation

Open it
. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. <span>Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing weal

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744466218252

#function-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten

In summary, money fulfills three important functions, it:

• acts as a medium of exchange;

• provides individuals with a way of storing wealth; and

• provides society with a convenient measure of value and unit of account.

Parent (intermediate) annotation

Open it
Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. <span>In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. <span><body><html>

Original toplevel document

Money
: the price of oranges in terms of pears; of pears in terms of bread; of bread in terms of milk; or of milk in terms of oranges. A barter economy has no common measure of value that would make multiple transactions simple. <span>2.1.1. The Functions of Money The most generic definition of money is that it is any generally accepted medium of exchange. A medium of exchange is any asset that can be used to purchase goods and services or to repay debts. Money can thus eliminate the debilitating double coincidence of the “wants” problem that exists in a barter economy. When this medium of exchange exists, a farmer wishing to sell wheat for wine does not need to identify a wine producer in search of wheat. Instead, he can sell wheat to those who want wheat in exchange for money. The farmer can then exchange this money for wine with a wine producer, who in turn can exchange that money for the goods or services that she wants. However, for money to act as this liberating medium of exchange, it must possess certain qualities. It must: be readily acceptable, have a known value, be easily divisible, have a high value relative to its weight, and be difficult to counterfeit. Qualities (i) and (ii) are closely related; the medium of exchange will only be acceptable if it has a known value. If the medium of exchange has quality (iii), then it can be used to purchase items of relatively little value and of relatively large value with equal ease. Having a high value relative to its weight is a practical convenience, meaning that people can carry around sufficient wealth for their transaction needs. Finally, if the medium of exchange can be counterfeited easily, then it would soon cease to have a value and would not be readily acceptable as a means of effecting transactions; in other words, it would not satisfy qualities (i) and (ii). Given the qualities that money needs to have, it is clear why precious metals (particularly gold and silver) often fulfilled the role of medium of exchange in early societies, and as recently as the early part of the twentieth century. Precious metals were acceptable as a medium of exchange because they had a known value, were easily divisible, had a high value relative to their weight, and could not be easily counterfeited. Thus, precious metals were capable of acting as a medium of exchange. But they also fulfilled two other useful functions that are essential for the characteristics of money. In a barter economy, it is difficult to store wealth from one year to the next when one’s produce is perishable, or indeed, if it requires large warehouses in which to store it. Because precious metals like gold had a high value relative to their bulk and were not perishable, they could act as a store of wealth . However, their ability to act as a store of wealth not only depended on the fact that they did not perish physically over time, but also on the belief that others would always value precious metals. The value from year to year of precious metals depended on people’s continued demand for them in ornaments, jewellery, and so on. For example, people were willing to use gold as a store of wealth because they believed that it would remain highly valued. However, if gold became less valuable to people relative to other goods and services year after year it would not be able to fulfill its role as a store of value , and as such might also lose its status as a medium of exchange. Another important characteristic of money is that it can be used as a universal unit of account. As such, it can create a single unitary measure of value for all goods and services. In an economy where gold and silver are the accepted medium of exchange, all prices, debts, and wealth can be recorded in terms of their gold or silver coin exchange value. Money, in its role as a unit of account, drastically reduces the number of prices in an economy compared to barter, which requires that prices be established for a good in terms of all other goods for which it might be exchanged. In summary, money fulfills three important functions, it: acts as a medium of exchange; provides individuals with a way of storing wealth; and provides society with a convenient measure of value and unit of account. 2.1.2. Paper Money and the Money Creation Process Although precious metals like gold and silver fulfilled the required functions of money

Annotation 1744467791116

2.1.2. Paper Money and the Money Creation Process

Although precious metals like gold and silver fulfilled the required functions of money relatively well for many years, and although carrying gold coins around was easier than carrying around one’s physical produce, it was not necessarily a safe way to conduct business.

A crucial development in the history of money was the promissory note . The process began when individuals began leaving their excess gold with goldsmiths, who would look after it for them. In turn the goldsmiths would give the depositors a receipt, stating how much gold they had deposited. Eventually these receipts were traded directly for goods and services, rather than there being a physical transfer of gold from the goods buyer to the goods seller. Of course, both the buyer and seller had to trust the goldsmith because the goldsmith had all the gold and the goldsmith’s customers had only pieces of paper. These depository receipts represented a promise to pay a certain amount of gold on demand. This paper money therefore became a proxy for the precious metals on which they were based, that is, they were directly related to a physical commodity. Many of these early goldsmiths evolved into banks, taking in excess wealth and in turn issuing promissory notes that could be used in commerce.

In taking in other people’s gold and issuing depository receipts and later promissory notes, it became clear to the goldsmiths and early banks that not all the gold that they held in their vaults would be withdrawn at any one time. Individuals were willing to buy and sell goods and services with the promissory notes, but the majority of the gold that backed the notes just sat in the vaults—although its ownership would change with the flow of commerce over time. A certain proportion of the gold that was not being withdrawn and used directly for commerce could therefore be lent to others at a rate of interest. By doing this, the early banks created money.

The process of money creation is a crucial concept for understanding the role that money plays in an economy. Its potency depends on the amount of money that banks keep in reserve to meet the withdrawals of its customers. This practice of lending customers’ money to others on the assumption that not all customers will want all of their money back at any one time is known as fractional reserve banking .

We can illustrate how it works through a simple example. Suppose that the bankers in an economy come to the view that they need to retain only 10 percent of any money deposited with them. This is known as the reserve requirement .2 Now consider what happens when a customer deposits €100 in the First Bank of Nations. This deposit changes the balance sheet of First Bank of Nations, as shown in Exhibit 2, and it represents a liability to the bank because it is effectively loaned to the bank by the customer. By lending 90 percent of this deposit to another customer the bank has two types of assets: (1) the bank’s reserves of €10, and (2) the loan equivalent to €90. Notice that the balance sheet still balances; €100 worth of assets and €100 worth of liabilities are

...

Money

Annotation 1744470150412

• Process state. The state may be new, ready, running, waiting, halted, and so on. • Program counter. The counter indicates the address of the next instruction to be executed for this process. • CPU registers. The registers vary in number and type, depending on the computer architecture. They include accumulators, index registers, stack pointers, and general-purpose registers, plus any condition-code information. Along with the program counter, this state information must be saved when an interrupt occurs, to allow the process to be continued correctly afterward (Figure 3.4). • CPU-scheduling information. This information includes a process priority, pointers to scheduling queues, and any other scheduling parameters. (Chapter 6 describes process scheduling.) • Memory-management information. This information may include such items as the value of the base and limit registers and the page tables, or the segment tables, depending on the memory system used by the operating system

pdf

cannot see any pdfs

Annotation 1744475393292

A crucial development in the history of money was the promissory note . The process began when individuals began leaving their excess gold with goldsmiths, who would look after it for them. In turn the goldsmiths would give the depositors a receipt, stating how much gold they had deposited. Eventually these receipts were traded directly for goods and services, rather than there being a physical transfer of gold from the goods buyer to the goods seller. Of course, both the buyer and seller had to trust the goldsmith because the goldsmith had all the gold and the goldsmith’s customers had only pieces of paper. These depository receipts represented a promise to pay a certain amount of gold on demand. This paper money therefore became a proxy for the precious metals on which they were based, that is, they were directly related to a physical commodity. Many of these early goldsmiths evolved into banks, taking in excess wealth and in turn issuing promissory notes that could be used in commerce.

Parent (intermediate) annotation

Open it
lver fulfilled the required functions of money relatively well for many years, and although carrying gold coins around was easier than carrying around one’s physical produce, it was not necessarily a safe way to conduct business. <span>A crucial development in the history of money was the promissory note . The process began when individuals began leaving their excess gold with goldsmiths, who would look after it for them. In turn the goldsmiths would give the depositors a receipt, stating how much gold they had deposited. Eventually these receipts were traded directly for goods and services, rather than there being a physical transfer of gold from the goods buyer to the goods seller. Of course, both the buyer and seller had to trust the goldsmith because the goldsmith had all the gold and the goldsmith’s customers had only pieces of paper. These depository receipts represented a promise to pay a certain amount of gold on demand. This paper money therefore became a proxy for the precious metals on which they were based, that is, they were directly related to a physical commodity. Many of these early goldsmiths evolved into banks, taking in excess wealth and in turn issuing promissory notes that could be used in commerce. In taking in other people’s gold and issuing depository receipts and later promissory notes, it became clear to the goldsmiths and early banks that not all the gold that th

Money

Annotation 1744480636172

In taking in other people’s gold and issuing depository receipts and later promissory notes, it became clear to the goldsmiths and early banks that not all the gold that they held in their vaults would be withdrawn at any one time. Individuals were willing to buy and sell goods and services with the promissory notes, but the majority of the gold that backed the notes just sat in the vaults—although its ownership would change with the flow of commerce over time. A certain proportion of the gold that was not being withdrawn and used directly for commerce could therefore be lent to others at a rate of interest. By doing this, the early banks created money.

Parent (intermediate) annotation

Open it
n which they were based, that is, they were directly related to a physical commodity. Many of these early goldsmiths evolved into banks, taking in excess wealth and in turn issuing promissory notes that could be used in commerce. <span>In taking in other people’s gold and issuing depository receipts and later promissory notes, it became clear to the goldsmiths and early banks that not all the gold that they held in their vaults would be withdrawn at any one time. Individuals were willing to buy and sell goods and services with the promissory notes, but the majority of the gold that backed the notes just sat in the vaults—although its ownership would change with the flow of commerce over time. A certain proportion of the gold that was not being withdrawn and used directly for commerce could therefore be lent to others at a rate of interest. By doing this, the early banks created money. The process of money creation is a crucial concept for understanding the role that money plays in an economy. Its potency depends on the amount of money that banks keep in

Money

Annotation 1744482995468

The process of money creation is a crucial concept for understanding the role that money plays in an economy. Its potency depends on the amount of money that banks keep in reserve to meet the withdrawals of its customers. This practice of lending customers’ money to others on the assumption that not all customers will want all of their money back at any one time is known as fractional reserve banking

Parent (intermediate) annotation

Open it
h the flow of commerce over time. A certain proportion of the gold that was not being withdrawn and used directly for commerce could therefore be lent to others at a rate of interest. By doing this, the early banks created money. <span>The process of money creation is a crucial concept for understanding the role that money plays in an economy. Its potency depends on the amount of money that banks keep in reserve to meet the withdrawals of its customers. This practice of lending customers’ money to others on the assumption that not all customers will want all of their money back at any one time is known as fractional reserve banking . We can illustrate how it works through a simple example. Suppose that the bankers in an economy come to the view that they need to retain only 10 percent of any money dep

Money

Annotation 1744484568332

The total amount of money ‘created’ from this one deposit of €100 can be calculated as:

Equation (1)

New deposit/Reserve requirement = €100/0.10 = €1,000

It is the sum of all the deposits now in the banking system. You should also note that the original deposit of €100, via the practice of reserve banking, was the catalyst for €1,000 worth of economic transactions. That is not to say that economic growth would be zero without this process, but instead that it can be an important component in economic activity.

Parent (intermediate) annotation

Open it
es Reserves €9 Deposits €90 Loans €81 Third Bank of Nations Assets Liabilities Reserves €8.1 Deposits €81 Loans €72.9 This process continues until there is no more money left to be deposited and loaned out. <span>The total amount of money ‘created’ from this one deposit of €100 can be calculated as: Equation (1)  New deposit/Reserve requirement = €100/0.10 = €1,000 It is the sum of all the deposits now in the banking system. You should also note that the original deposit of €100, via the practice of reserve banking, was the catalyst for €1,000 worth of economic transactions. That is not to say that economic growth would be zero without this process, but instead that it can be an important component in economic activity. The amount of money that the banking system creates through the practice of fractional reserve banking is a function of 1 divided by the reserve requirement, a quantity kno

Money

Annotation 1744486141196

The amount of money that the banking system creates through the practice of fractional reserve banking is a function of 1 divided by the reserve requirement, a quantity known as the money multiplier. In the case just examined, the money multiplier is 1/0.10 = 10. This equation implies that the smaller the reserve requirement, the greater the money multiplier effect.

Parent (intermediate) annotation

Open it
e of reserve banking, was the catalyst for €1,000 worth of economic transactions. That is not to say that economic growth would be zero without this process, but instead that it can be an important component in economic activity. <span>The amount of money that the banking system creates through the practice of fractional reserve banking is a function of 1 divided by the reserve requirement, a quantity known as the money multiplier .3 In the case just examined, the money multiplier is 1/0.10 = 10. Equation 1 implies that the smaller the reserve requirement, the greater the money multiplier effect. In our simplistic example, we assumed that the banks themselves set their own reserve requirements. However, in some economies, the central bank sets the reserve requiremen

Money

Annotation 1744488500492

In our simplistic example, we assumed that the banks themselves set their own reserve requirements. However, in some economies, the central bank sets the reserve requirement, which is a potential means of affecting money growth. In any case, a prudent bank would be wise to have sufficient reserves such that the withdrawal demands of their depositors can be met in stressful economic and credit market conditions.

Parent (intermediate) annotation

Open it
eserve requirement, a quantity known as the money multiplier .3 In the case just examined, the money multiplier is 1/0.10 = 10. Equation 1 implies that the smaller the reserve requirement, the greater the money multiplier effect. <span>In our simplistic example, we assumed that the banks themselves set their own reserve requirements. However, in some economies, the central bank sets the reserve requirement, which is a potential means of affecting money growth. In any case, a prudent bank would be wise to have sufficient reserves such that the withdrawal demands of their depositors can be met in stressful economic and credit market conditions. Later, when we discuss central banks and central bank policy, we will see how central banks can use the mechanism just described to affect the money supply. Specifically, t

Money

Money Measures in the Eurozone

The European Central Bank (ECB) produces three measures of euro area money supply. The narrowest is M1. M1 comprises notes and coins in circulation, plus all overnight deposits. M2 is a broader definition of euro area money that includes M1, plus deposits redeemable with notice up to three months and deposits with maturity up to two years. Finally, the euro area’s broadest definition of money is M3, which includes M2, plus repurchase agreements, money market fund units, and debt securities with up to two years maturity.

Money Measures in Japan

The Bank of Japan calculates three measures of money. M1 is the narrowest measure and consists of cash currency in circulation. M2 incorporates M1 but also includes certificates of deposit (CDs). The broadest measure, M3, incorporates M2, plus deposits held at post offices, plus other savings and deposits with financial institutions. There is also a “broad measure of liquidity” that encompasses M3 as well as a range of other liquid assets, such as government bonds and commercial paper.

Money Measures in the United Kingdom

The United Kingdom produces a set of four measures of the money stock. M0 is the narrowest measure and comprises notes and coins held outside the Bank of England, plus Bankers’ deposits at the Bank of England. M2includes M0, plus (effectively) all retail bank deposits. M4 includes M2, plus wholesale bank and building society deposits and also certificates of deposit. Finally, the Bank of England produces another measure called M3H, which is a measure created to be comparable with money definitions in the EU (see above). M3H includes M4, plus UK residents’ and corporations’ foreign currency deposits in banks and building societies.

Money
e in the money supply. The central bank may also lend reserves directly to banks, creating excess reserves (relative to any imposed or self-imposed reserve requirement) that can support new loans and money expansion. <span>2.1.3. Definitions of Money The process of money creation raises a fundamental issue: What is money? In an economy with money but without promissory notes and fractional reserve banking, money is relatively easy to define: Money is the total amount of gold and silver coins in circulation, or their equivalent. The money creation process above, however, indicates that a broader definition of money might encompass all the notes and coins in circulation plus all bank deposits. More generally, we might define money as any medium that can be used to purchase goods and services. Notes and coins can be used to fulfill this purpose, and yet such currency is not the only means of purchasing goods and services. Personal cheques can be written based on a bank chequing account, while debit cards can be used for the same purpose. But what about time deposits or savings accounts? Nowadays transfers can be made relatively easily from a savings account to a current account; therefore, these savings accounts might also be considered as part of the stock of money. Credit cards are also used to pay for goods and services; however, there is an important difference between credit card payments and those made by cheques and debit cards. Unlike a cheque or debit card payment, a credit card payment involves a deferred payment. Basically, the greater the complexity of any financial system, the harder it is to define money. The monetary authorities in most modern economies produce a range of measures of money (see Exhibit 3). But generally speaking, the money stock consists of notes and coins in circulation, plus the deposits in banks and other financial institutions that can be readily used to make purchases of goods and services in the economy. In this regard, economists often speak of the rate of growth of narrow money and/or broad money . By narrow money, they generally mean the notes and coins in circulation in an economy, plus other very highly liquid deposits. Broad money encompasses narrow money but also includes the entire range of liquid assets that can be used to make purchases. Because financial systems, practice, and institutions vary from economy to economy, so do definitions of money; thus, it is difficult to make international comparisons. Still, most central banks produce both a narrow and broad measure of money, plus some intermediate ones too. Exhibit 3 shows the money definitions in four economies. <span><body><html>

Annotation 1744504491276

Money Measures in the United States
#definitions-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Money Measures in the United States

Original toplevel document

Money
e in the money supply. The central bank may also lend reserves directly to banks, creating excess reserves (relative to any imposed or self-imposed reserve requirement) that can support new loans and money expansion. <span>2.1.3. Definitions of Money The process of money creation raises a fundamental issue: What is money? In an economy with money but without promissory notes and fractional reserve banking, money is relatively easy to define: Money is the total amount of gold and silver coins in circulation, or their equivalent. The money creation process above, however, indicates that a broader definition of money might encompass all the notes and coins in circulation plus all bank deposits. More generally, we might define money as any medium that can be used to purchase goods and services. Notes and coins can be used to fulfill this purpose, and yet such currency is not the only means of purchasing goods and services. Personal cheques can be written based on a bank chequing account, while debit cards can be used for the same purpose. But what about time deposits or savings accounts? Nowadays transfers can be made relatively easily from a savings account to a current account; therefore, these savings accounts might also be considered as part of the stock of money. Credit cards are also used to pay for goods and services; however, there is an important difference between credit card payments and those made by cheques and debit cards. Unlike a cheque or debit card payment, a credit card payment involves a deferred payment. Basically, the greater the complexity of any financial system, the harder it is to define money. The monetary authorities in most modern economies produce a range of measures of money (see Exhibit 3). But generally speaking, the money stock consists of notes and coins in circulation, plus the deposits in banks and other financial institutions that can be readily used to make purchases of goods and services in the economy. In this regard, economists often speak of the rate of growth of narrow money and/or broad money . By narrow money, they generally mean the notes and coins in circulation in an economy, plus other very highly liquid deposits. Broad money encompasses narrow money but also includes the entire range of liquid assets that can be used to make purchases. Because financial systems, practice, and institutions vary from economy to economy, so do definitions of money; thus, it is difficult to make international comparisons. Still, most central banks produce both a narrow and broad measure of money, plus some intermediate ones too. Exhibit 3 shows the money definitions in four economies. <span><body><html>

Annotation 1744506850572

Money Measures in the Eurozone
#definitions-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Money Measures in the Eurozone

The European Central Bank (ECB) produces three measures of euro area money supply. The narrowest is M1. M1 comprises notes and coins in circulation, plus all overnight deposits. M2 is a broader definition of euro area money that includes M1, plus deposits redeemable with notice up to three months and deposits with maturity up to two years. Finally, the euro area’s broadest definition of money is M3, which includes M2, plus repurchase agreements, money market fund units, and debt securities with up to two years maturity.

Parent (intermediate) annotation

Open it
e of money currently produced by the Federal Reserve and includes M1, plus savings and money market deposits, time deposit accounts of less than \$100,000, plus other balances in retail money market and mutual funds. <span>Money Measures in the Eurozone The European Central Bank (ECB) produces three measures of euro area money supply. The narrowest is M1. M1 comprises notes and coins in circulation, plus all overnight deposits. M2 is a broader definition of euro area money that includes M1, plus deposits redeemable with notice up to three months and deposits with maturity up to two years. Finally, the euro area’s broadest definition of money is M3, which includes M2, plus repurchase agreements, money market fund units, and debt securities with up to two years maturity. Money Measures in Japan The Bank of Japan calculates three measures of money. M1 is the narrowest measure and consists of cash currency in circul

Original toplevel document

Money
e in the money supply. The central bank may also lend reserves directly to banks, creating excess reserves (relative to any imposed or self-imposed reserve requirement) that can support new loans and money expansion. <span>2.1.3. Definitions of Money The process of money creation raises a fundamental issue: What is money? In an economy with money but without promissory notes and fractional reserve banking, money is relatively easy to define: Money is the total amount of gold and silver coins in circulation, or their equivalent. The money creation process above, however, indicates that a broader definition of money might encompass all the notes and coins in circulation plus all bank deposits. More generally, we might define money as any medium that can be used to purchase goods and services. Notes and coins can be used to fulfill this purpose, and yet such currency is not the only means of purchasing goods and services. Personal cheques can be written based on a bank chequing account, while debit cards can be used for the same purpose. But what about time deposits or savings accounts? Nowadays transfers can be made relatively easily from a savings account to a current account; therefore, these savings accounts might also be considered as part of the stock of money. Credit cards are also used to pay for goods and services; however, there is an important difference between credit card payments and those made by cheques and debit cards. Unlike a cheque or debit card payment, a credit card payment involves a deferred payment. Basically, the greater the complexity of any financial system, the harder it is to define money. The monetary authorities in most modern economies produce a range of measures of money (see Exhibit 3). But generally speaking, the money stock consists of notes and coins in circulation, plus the deposits in banks and other financial institutions that can be readily used to make purchases of goods and services in the economy. In this regard, economists often speak of the rate of growth of narrow money and/or broad money . By narrow money, they generally mean the notes and coins in circulation in an economy, plus other very highly liquid deposits. Broad money encompasses narrow money but also includes the entire range of liquid assets that can be used to make purchases. Because financial systems, practice, and institutions vary from economy to economy, so do definitions of money; thus, it is difficult to make international comparisons. Still, most central banks produce both a narrow and broad measure of money, plus some intermediate ones too. Exhibit 3 shows the money definitions in four economies. <span><body><html>

Annotation 1744509209868

Money Measures in Japan (Haruhiko Kuroda)
#definitions-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten

The Bank of Japan calculates three measures of money. M1 is the narrowest measure and consists of cash currency in circulation. M2 incorporates M1 but also includes certificates of deposit (CDs). The broadest measure, M3, incorporates M2, plus deposits held at post offices, plus other savings and deposits with financial institutions. There is also a “broad measure of liquidity” that encompasses M3 as well as a range of other liquid assets, such as government bonds and commercial paper.

Parent (intermediate) annotation

Open it
with maturity up to two years. Finally, the euro area’s broadest definition of money is M3, which includes M2, plus repurchase agreements, money market fund units, and debt securities with up to two years maturity. <span>Money Measures in Japan The Bank of Japan calculates three measures of money. M1 is the narrowest measure and consists of cash currency in circulation. M2 incorporates M1 but also includes certificates of deposit (CDs). The broadest measure, M3, incorporates M2, plus deposits held at post offices, plus other savings and deposits with financial institutions. There is also a “broad measure of liquidity” that encompasses M3 as well as a range of other liquid assets, such as government bonds and commercial paper. Money Measures in the United Kingdom The United Kingdom produces a set of four measures of the money stock. M0 is the narrowest measure and compr

Original toplevel document

Money
e in the money supply. The central bank may also lend reserves directly to banks, creating excess reserves (relative to any imposed or self-imposed reserve requirement) that can support new loans and money expansion. <span>2.1.3. Definitions of Money The process of money creation raises a fundamental issue: What is money? In an economy with money but without promissory notes and fractional reserve banking, money is relatively easy to define: Money is the total amount of gold and silver coins in circulation, or their equivalent. The money creation process above, however, indicates that a broader definition of money might encompass all the notes and coins in circulation plus all bank deposits. More generally, we might define money as any medium that can be used to purchase goods and services. Notes and coins can be used to fulfill this purpose, and yet such currency is not the only means of purchasing goods and services. Personal cheques can be written based on a bank chequing account, while debit cards can be used for the same purpose. But what about time deposits or savings accounts? Nowadays transfers can be made relatively easily from a savings account to a current account; therefore, these savings accounts might also be considered as part of the stock of money. Credit cards are also used to pay for goods and services; however, there is an important difference between credit card payments and those made by cheques and debit cards. Unlike a cheque or debit card payment, a credit card payment involves a deferred payment. Basically, the greater the complexity of any financial system, the harder it is to define money. The monetary authorities in most modern economies produce a range of measures of money (see Exhibit 3). But generally speaking, the money stock consists of notes and coins in circulation, plus the deposits in banks and other financial institutions that can be readily used to make purchases of goods and services in the economy. In this regard, economists often speak of the rate of growth of narrow money and/or broad money . By narrow money, they generally mean the notes and coins in circulation in an economy, plus other very highly liquid deposits. Broad money encompasses narrow money but also includes the entire range of liquid assets that can be used to make purchases. Because financial systems, practice, and institutions vary from economy to economy, so do definitions of money; thus, it is difficult to make international comparisons. Still, most central banks produce both a narrow and broad measure of money, plus some intermediate ones too. Exhibit 3 shows the money definitions in four economies. <span><body><html>

Annotation 1744512093452

Money Measures in the United Kingdom
#definitions-of-money #globo-terraqueo-session #has-images #monetary-policy #money #reading-agustin-carsten
Money Measures in the United Kingdom

The United Kingdom produces a set of four measures of the money stock. M0 is the narrowest measure and comprises notes and coins held outside the Bank of England, plus Bankers’ deposits at the Bank of England. M2includes M0, plus (effectively) all retail bank deposits. M4 includes M2, plus wholesale bank and building society deposits and also certificates of deposit. Finally, the Bank of England produces another measure called M3H, which is a measure created to be comparable with money definitions in the EU (see above). M3H includes M4, plus UK residents’ and corporations’ foreign currency deposits in banks and building societies.

Parent (intermediate) annotation

Open it
plus other savings and deposits with financial institutions. There is also a “broad measure of liquidity” that encompasses M3 as well as a range of other liquid assets, such as government bonds and commercial paper. <span>Money Measures in the United Kingdom The United Kingdom produces a set of four measures of the money stock. M0 is the narrowest measure and comprises notes and coins held outside the Bank of England, plus Bankers’ deposits at the Bank of England. M2includes M0, plus (effectively) all retail bank deposits. M4 includes M2, plus wholesale bank and building society deposits and also certificates of deposit. Finally, the Bank of England produces another measure called M3H, which is a measure created to be comparable with money definitions in the EU (see above). M3H includes M4, plus UK residents’ and corporations’ foreign currency deposits in banks and building societies. <span><body><html>

Original toplevel document

Money
e in the money supply. The central bank may also lend reserves directly to banks, creating excess reserves (relative to any imposed or self-imposed reserve requirement) that can support new loans and money expansion. <span>2.1.3. Definitions of Money The process of money creation raises a fundamental issue: What is money? In an economy with money but without promissory notes and fractional reserve banking, money is relatively easy to define: Money is the total amount of gold and silver coins in circulation, or their equivalent. The money creation process above, however, indicates that a broader definition of money might encompass all the notes and coins in circulation plus all bank deposits. More generally, we might define money as any medium that can be used to purchase goods and services. Notes and coins can be used to fulfill this purpose, and yet such currency is not the only means of purchasing goods and services. Personal cheques can be written based on a bank chequing account, while debit cards can be used for the same purpose. But what about time deposits or savings accounts? Nowadays transfers can be made relatively easily from a savings account to a current account; therefore, these savings accounts might also be considered as part of the stock of money. Credit cards are also used to pay for goods and services; however, there is an important difference between credit card payments and those made by cheques and debit cards. Unlike a cheque or debit card payment, a credit card payment involves a deferred payment. Basically, the greater the complexity of any financial system, the harder it is to define money. The monetary authorities in most modern economies produce a range of measures of money (see Exhibit 3). But generally speaking, the money stock consists of notes and coins in circulation, plus the deposits in banks and other financial institutions that can be readily used to make purchases of goods and services in the economy. In this regard, economists often speak of the rate of growth of narrow money and/or broad money . By narrow money, they generally mean the notes and coins in circulation in an economy, plus other very highly liquid deposits. Broad money encompasses narrow money but also includes the entire range of liquid assets that can be used to make purchases. Because financial systems, practice, and institutions vary from economy to economy, so do definitions of money; thus, it is difficult to make international comparisons. Still, most central banks produce both a narrow and broad measure of money, plus some intermediate ones too. Exhibit 3 shows the money definitions in four economies. <span><body><html>

Annotation 1744560327948

Ethical actions are those actions that are perceived as beneficial and conform to

the ethical expectations of society.

Subject 1. Ethics
rding what is good, acceptable, or responsible behavior, and what is bad, unacceptable, or forbidden behavior. They provide guidance for our behavior. Ethical conduct is behavior that follows moral principles. <span>Ethical actions are those actions that are perceived as beneficial and conform to the ethical expectations of society. Ethics encompass a set of moral principles ( code of ethics ) and standards of conduct that provide guidance for our behavior. Violations can ha

Annotation 1744561900812

 Ethics encompass a set of moral principles (code of ethics) and standards of conduct that provide guidance for our behavior. Violations can harm the community in a variety of ways.

Subject 1. Ethics
Ethical conduct is behavior that follows moral principles. Ethical actions are those actions that are perceived as beneficial and conform to the ethical expectations of society. <span>Ethics encompass a set of moral principles ( code of ethics ) and standards of conduct that provide guidance for our behavior. Violations can harm the community in a variety of ways. <span><body><html>

Annotation 1744564260108

 A profession is:
• based on specialized knowledge and skills.

• based on service to others.

• practiced by members who share and agree to adhere to a common code of

ethics.

Subject 2. Ethics and Professionalism
A profession is: based on specialized knowledge and skills. based on service to others. practiced by members who share and agree to adhere to a common code of ethics. A profession's code of ethics: communicates the shared principles and expected behaviors of its members. generates confidence n

Annotation 1744565832972

A profession's code of ethics:

• communicates the shared principles and expected behaviors of its members.

• generates confidence not only among members of the organization but also

among non-members (clients, prospective clients, and/or the general public).

Subject 2. Ethics and Professionalism
based on specialized knowledge and skills. based on service to others. practiced by members who share and agree to adhere to a common code of ethics. <span>A profession's code of ethics: communicates the shared principles and expected behaviors of its members. generates confidence not only among members of the organization but also among non-members (clients, prospective clients, and/or the general public). A profession may adopt standards of conduct to enhance and clarify the code of ethics. <span><body><html>

Annotation 1744567405836

 A profession may adopt standards of conduct to enhance and clarify the code of ethics.

Subject 2. Ethics and Professionalism
ected behaviors of its members. generates confidence not only among members of the organization but also among non-members (clients, prospective clients, and/or the general public). <span>A profession may adopt standards of conduct to enhance and clarify the code of ethics. <span><body><html>

Annotation 1744569240844

 Laws often codify ethical actions that lead to better outcomes for society or specific groups of stakeholders. Legal and ethical conduct often coincide, but they are not always the same.
• Some legal behaviors are not considered ethical.

• Some ethical behaviors may not be legal in certain countries.

Subject 5. Ethical vs. Legal Standards
Laws often codify ethical actions that lead to better outcomes for society or specific groups of stakeholders. Legal and ethical conduct often coincide, but they are not always the same. Some legal behaviors are not considered ethical. Some ethical behaviors may not be legal in certain countries. Laws and regulations are not always the best mechanism to reduce unethical behavior. They often lag behind current circumstances; legal standards

Annotation 1744570813708

Laws and regulations are not always the best mechanism to reduce unethical behavior. They often lag behind current circumstances; legal standards are often created to address past ethical failings and do not provide guidance for an evolving and increasingly complex world. In addition, new laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different but similarly problematic conduct.

Subject 5. Ethical vs. Legal Standards
but they are not always the same. Some legal behaviors are not considered ethical. Some ethical behaviors may not be legal in certain countries. <span>Laws and regulations are not always the best mechanism to reduce unethical behavior. They often lag behind current circumstances; legal standards are often created to address past ethical failings and do not provide guidance for an evolving and increasingly complex world. In addition, new laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different but similarly problematic conduct. Investment professionals should act beyond legal standards, making good judgments and responsible choices even in the absence of clear laws or rules.

Annotation 1744572386572

Investment professionals should act beyond legal standards, making good judgments and responsible choices even in the absence of clear laws or rules.

Subject 5. Ethical vs. Legal Standards
rovide guidance for an evolving and increasingly complex world. In addition, new laws designed to reduce or eliminate conduct that adversely affects the markets can create opportunities for different but similarly problematic conduct. <span>Investment professionals should act beyond legal standards, making good judgments and responsible choices even in the absence of clear laws or rules. <span><body><html>

Annotation 1744573959436

Both internal and external factors influence working capital needs

Parent (intermediate) annotation

Open it
Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors (Bill Cosby) External Factors

Original toplevel document

Reading 38  Working Capital Management Intro
and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires reliable cash forecasts, as well as current and accurate information on transactions and bank balances. <span>Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors External Factors Company size and growth rates Organizational structure Sophistication of working capital management Borrowing and investing positions/activities/capacities Banking services Interest rates New technologies and new products The economy Competitors The scope of working capital management includes transactions, relations, analyses, and focus: Transactions include payments for trade, financing, and investment. Relations with financial institutions and trading partners must be maintained to ensure that the transactions work effectively. Analyses of working capital management activities are required so that appropriate strategies can be formulated and implemented. Focus requires that organizations of all sizes today must have a global viewpoint with strong emphasis on liquidity. In this reading, we examine the different types of working capital and the management issues associated with each. We also look at methods of evaluating the effectiveness of working capital management. <span><body><html>

Annotation 1744575532300

Internal Factors Affecting Working Capital Needs
• Company size and growth rates

• Organizational structure

• Sophistication of working capital management

• Borrowing and investing positions/activities/capacities

Parent (intermediate) annotation

Open it
ead><head> Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors (Bill Cosby) External Factors Company size and growth rates Organizational structure Sophistication of working capital management Borrowing and investing positions/activities/capacities Banking services Interest rates New technologies and new products The economy Competitors </s

Original toplevel document

Reading 38  Working Capital Management Intro
and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires reliable cash forecasts, as well as current and accurate information on transactions and bank balances. <span>Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors External Factors Company size and growth rates Organizational structure Sophistication of working capital management Borrowing and investing positions/activities/capacities Banking services Interest rates New technologies and new products The economy Competitors The scope of working capital management includes transactions, relations, analyses, and focus: Transactions include payments for trade, financing, and investment. Relations with financial institutions and trading partners must be maintained to ensure that the transactions work effectively. Analyses of working capital management activities are required so that appropriate strategies can be formulated and implemented. Focus requires that organizations of all sizes today must have a global viewpoint with strong emphasis on liquidity. In this reading, we examine the different types of working capital and the management issues associated with each. We also look at methods of evaluating the effectiveness of working capital management. <span><body><html>

Annotation 1744580775180

External Factors Affecting Working Capital Needs
• Banking services
• Interest rates
• New technologies and products
• Competitors
• Economy

Parent (intermediate) annotation

Open it
Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors (Bill Cosby) <span>External Factors Company size and growth rates Organizational structure Sophistication of working capital management Borrowing and investing positions/activities/capacities Banking services Interest rates New technologies and new products The economy Competitors <span><body><html>

Original toplevel document

Reading 38  Working Capital Management Intro
and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires reliable cash forecasts, as well as current and accurate information on transactions and bank balances. <span>Both internal and external factors influence working capital needs; we summarize them in Exhibit 1. Exhibit 1. Internal and External Factors That Affect Working Capital Needs Internal Factors External Factors Company size and growth rates Organizational structure Sophistication of working capital management Borrowing and investing positions/activities/capacities Banking services Interest rates New technologies and new products The economy Competitors The scope of working capital management includes transactions, relations, analyses, and focus: Transactions include payments for trade, financing, and investment. Relations with financial institutions and trading partners must be maintained to ensure that the transactions work effectively. Analyses of working capital management activities are required so that appropriate strategies can be formulated and implemented. Focus requires that organizations of all sizes today must have a global viewpoint with strong emphasis on liquidity. In this reading, we examine the different types of working capital and the management issues associated with each. We also look at methods of evaluating the effectiveness of working capital management. <span><body><html>

Annotation 1744583396620

Because analyzing vast amounts of data can be both time consuming and difficult, investors often use a single measure that consolidates this information and reflects the performance of an entire security market.

Parent (intermediate) annotation

Open it
Investors gather and analyze vast amounts of information about security markets on a continual basis. Because this work can be both time consuming and data intensive, investors often use a single measure that consolidates this information and reflects the performance of an entire security market. Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into i

Original toplevel document

Reading 45  Security Market Indexes (Intro)

Annotation 1744584969484

Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.

Parent (intermediate) annotation

Open it
ity markets on a continual basis. Because this work can be both time consuming and data intensive, investors often use a single measure that consolidates this information and reflects the performance of an entire security market. <span>Security market indexes were first introduced as a simple measure to reflect the performance of the US stock market. Since then, security market indexes have evolved into important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.   in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something. ORIGIN OF MARKET INDEXES

Original toplevel document

Reading 45  Security Market Indexes (Intro)

Annotation 1744586542348

in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something.

Parent (intermediate) annotation

Open it
important multi-purpose tools that help investors track the performance of various security markets, estimate risk, and evaluate the performance of investment managers. They also form the basis for new investment products.   <span>in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something. ORIGIN OF MARKET INDEXES Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before

Original toplevel document

Reading 45  Security Market Indexes (Intro)

Annotation 1744588115212

ORIGIN OF MARKET INDEXES

Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before they had access to a simple indicator to reflect security market information.1 To give readers a sense of how the US stock market in general performed on a given day, publishers Charles H. Dow and Edward D. Jones introduced the Dow Jones Average, the world’s first security market index, in 1884.2 The index, which appeared in The Customers’ Afternoon Letter, consisted of the stocks of nine railroads and two industrial companies. It eventually became the Dow Jones Transportation Average.3Convinced that industrial companies, rather than railroads, would be “the great speculative market” of the future, Dow and Jones introduced a second index in May 1896—the Dow Jones Industrial Average (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4,5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes.

Parent (intermediate) annotation

Open it
nce of investment managers. They also form the basis for new investment products.   in·dex, noun (pl. in·dex·es or in·di·ces) Latin indic-, index, from indicare to indicate: an indicator, sign, or measure of something. <span>ORIGIN OF MARKET INDEXES Investors had access to regularly published data on individual security prices in London as early as 1698, but nearly 200 years passed before they had access to a simple indicator to reflect security market information.1 To give readers a sense of how the US stock market in general performed on a given day, publishers Charles H. Dow and Edward D. Jones introduced the Dow Jones Average, the world’s first security market index, in 1884.2 The index, which appeared in The Customers’ Afternoon Letter, consisted of the stocks of nine railroads and two industrial companies. It eventually became the Dow Jones Transportation Average.3Convinced that industrial companies, rather than railroads, would be “the great speculative market” of the future, Dow and Jones introduced a second index in May 1896—the Dow Jones Industrial Average (DJIA). It had an initial value of 40.94 and consisted of 12 stocks from major US industries.4 , 5 Today, investors can choose from among thousands of indexes to measure and monitor different security markets and asset classes. <span><body><html>

Original toplevel document

Reading 45  Security Market Indexes (Intro)

Annotation 1744590736652

Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios.

Parent (intermediate) annotation

Open it
Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return ch

Original toplevel document

Reading 47  Overview of Equity Securities (Intro)
Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions: What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations? What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies? What are private equity securities, and how do they differ from public equity securities? What are depository receipts and their various types, and what is the rationale for investing in them? What are the risk factors involved in investing in equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines

Annotation 1744592309516

The study of equity securities is important for many reasons:
1. The decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio.
2. Different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways.
3. Variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features.

Parent (intermediate) annotation

Open it
on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. <span>The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a glob

Original toplevel document

Reading 47  Overview of Equity Securities (Intro)
Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions: What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations? What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies? What are private equity securities, and how do they differ from public equity securities? What are depository receipts and their various types, and what is the rationale for investing in them? What are the risk factors involved in investing in equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines

Annotation 1744593882380

This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions:

• What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations?

• What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies?

• What are private equity securities, and how do they differ from public equity securities?

• What are depository receipts and their various types, and what is the rationale for investing in them?

• What are the risk factors involved in investing in equity securities?

• How do equity securities create company value?

• What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return?

Parent (intermediate) annotation

Open it
heir risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. <span>This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions: What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations? What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies? What are private equity securities, and how do they differ from public equity securities? What are depository receipts and their various types, and what is the rationale for investing in them? What are the risk factors involved in investing in equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? <span><body><html>

Original toplevel document

Reading 47  Overview of Equity Securities (Intro)
Equity securities represent ownership claims on a company’s net assets. As an asset class, equity plays a fundamental role in investment analysis and portfolio management because it represents a significant portion of many individual and institutional investment portfolios. The study of equity securities is important for many reasons. First, the decision on how much of a client’s portfolio to allocate to equities affects the risk and return characteristics of the entire portfolio. Second, different types of equity securities have different ownership claims on a company’s net assets, which affect their risk and return characteristics in different ways. Finally, variations in the features of equity securities are reflected in their market prices, so it is important to understand the valuation implications of these features. This reading provides an overview of equity securities and their different features and establishes the background required to analyze and value equity securities in a global context. It addresses the following questions: What distinguishes common shares from preference shares, and what purposes do these securities serve in financing a company’s operations? What are convertible preference shares, and why are they often used to raise equity for unseasoned or highly risky companies? What are private equity securities, and how do they differ from public equity securities? What are depository receipts and their various types, and what is the rationale for investing in them? What are the risk factors involved in investing in equity securities? How do equity securities create company value? What is the relationship between a company’s cost of equity, its return on equity, and investors’ required rate of return? The remainder of this reading is organized as follows. Section 2 provides an overview of global equity markets and their historical performance. Section 3 examines

Annotation 1744596241676

In a general sense, economics is the study of production, distribution, and consumption and can be divided into two broad areas of study: macroeconomics and microeconomics. Macroeconomics deals with aggregate economic quantities, such as national output and national income. Macroeconomics has its roots in microeconomics , which deals with markets and decision making of individual economic units, including consumers and businesses. Microeconomics is a logical starting point for the study of economics.

Prerequisite Reading Demand and Supply Analysis: Introduction
In a general sense, economics is the study of production, distribution, and consumption and can be divided into two broad areas of study: macroeconomics and microeconomics. Macroeconomics deals with aggregate economic quantities, such as national output and national income. Macroeconomics has its roots in microeconomics , which deals with markets and decision making of individual economic units, including consumers and businesses. Microeconomics is a logical starting point for the study of economics. This reading focuses on a fundamental subject in microeconomics: demand and supply analysis. Demand and supply analysis is the study of how buyers and sellers interact to

Annotation 1744597814540

This reading focuses on a fundamental subject in microeconomics: demand and supply analysis. Demand and supply analysis is the study of how buyers and sellers interact to determine transaction prices and quantities. As we will see, prices simultaneously reflect both the value to the buyer of the next (or marginal) unit and the cost to the seller of that unit. In private enterprise market economies, which are the chief concern of investment analysts, demand and supply analysis encompasses the most basic set of microeconomic tools.

Prerequisite Reading Demand and Supply Analysis: Introduction
croeconomics has its roots in microeconomics , which deals with markets and decision making of individual economic units, including consumers and businesses. Microeconomics is a logical starting point for the study of economics. <span>This reading focuses on a fundamental subject in microeconomics: demand and supply analysis. Demand and supply analysis is the study of how buyers and sellers interact to determine transaction prices and quantities. As we will see, prices simultaneously reflect both the value to the buyer of the next (or marginal) unit and the cost to the seller of that unit. In private enterprise market economies, which are the chief concern of investment analysts, demand and supply analysis encompasses the most basic set of microeconomic tools. Traditionally, microeconomics classifies private economic units into two groups: consumers (or households) and firms. These two groups give rise, respectively, to the theor

Annotation 1744599387404

Traditionally, microeconomics classifies private economic units into two groups: consumers (or households) and firms. These two groups give rise, respectively, to the theory of the consumer and theory of the firm as two branches of study. The theory of the consumer deals with consumption (the demand for goods and services) by utility-maximizing individuals (i.e., individuals who make decisions that maximize the satisfaction received from present and future consumption). The theory of the firm deals with the supply of goods and services by profit-maximizing firms. The theory of the consumer and the theory of the firm are important because they help us understand the foundations of demand and supply. Subsequent readings will focus on the theory of the consumer and the theory of the firm.

Prerequisite Reading Demand and Supply Analysis: Introduction
marginal) unit and the cost to the seller of that unit. In private enterprise market economies, which are the chief concern of investment analysts, demand and supply analysis encompasses the most basic set of microeconomic tools. <span>Traditionally, microeconomics classifies private economic units into two groups: consumers (or households) and firms. These two groups give rise, respectively, to the theory of the consumer and theory of the firm as two branches of study. The theory of the consumer deals with consumption (the demand for goods and services) by utility-maximizing individuals (i.e., individuals who make decisions that maximize the satisfaction received from present and future consumption). The theory of the firm deals with the supply of goods and services by profit-maximizing firms. The theory of the consumer and the theory of the firm are important because they help us understand the foundations of demand and supply. Subsequent readings will focus on the theory of the consumer and the theory of the firm. Investment analysts, particularly equity and credit analysts, must regularly analyze products and services, their costs, prices, possible substitutes, and complements, to r

Annotation 1744600960268

Investment analysts, particularly equity and credit analysts, must regularly analyze products and services, their costs, prices, possible substitutes, and complements, to reach conclusions about a company’s profitability and business risk (risk relating to operating profits). Furthermore, unless the analyst has a sound understanding of the demand and supply model of markets, he or she cannot hope to forecast how external events—such as a shift in consumer tastes or changes in taxes and subsidies or other intervention in markets—will influence a firm’s revenue, earnings, and cash flows.

Prerequisite Reading Demand and Supply Analysis: Introduction
s. The theory of the consumer and the theory of the firm are important because they help us understand the foundations of demand and supply. Subsequent readings will focus on the theory of the consumer and the theory of the firm. <span>Investment analysts, particularly equity and credit analysts, must regularly analyze products and services, their costs, prices, possible substitutes, and complements, to reach conclusions about a company’s profitability and business risk (risk relating to operating profits). Furthermore, unless the analyst has a sound understanding of the demand and supply model of markets, he or she cannot hope to forecast how external events—such as a shift in consumer tastes or changes in taxes and subsidies or other intervention in markets—will influence a firm’s revenue, earnings, and cash flows. Having grasped the tools and concepts presented in this reading, the reader should also be able to understand many important economic relations and facts and be able to ans

Annotation 1744602533132

Having grasped the tools and concepts presented in this reading, the reader should also be able to understand many important economic relations and facts and be able to answer questions, such as:

• Why do consumers usually buy more when the price falls? Is it irrational to violate this “law of demand”?

• What are appropriate measures of how sensitive the quantity demanded or supplied is to changes in price, income, and prices of other goods? What affects those sensitivities?

• If a firm lowers its price, will its total revenue also fall? Are there conditions under which revenue might rise as price falls and what are those? Why?

• What is an appropriate measure of the total value consumers or producers receive from the opportunity to buy and sell goods and services in a free market? How might government intervention reduce that value, and what is an appropriate measure of that loss?

• What tools are available that help us frame the trade-offs that consumers and investors face as they must give up one opportunity to pursue another?

• Is it reasonable to expect markets to converge to an equilibrium price? What are the conditions that would make that equilibrium stable or unstable in response to external shocks?

• How do different types of auctions affect price discovery?

Prerequisite Reading Demand and Supply Analysis: Introduction
el of markets, he or she cannot hope to forecast how external events—such as a shift in consumer tastes or changes in taxes and subsidies or other intervention in markets—will influence a firm’s revenue, earnings, and cash flows. <span>Having grasped the tools and concepts presented in this reading, the reader should also be able to understand many important economic relations and facts and be able to answer questions, such as: Why do consumers usually buy more when the price falls? Is it irrational to violate this “law of demand”? What are appropriate measures of how sensitive the quantity demanded or supplied is to changes in price, income, and prices of other goods? What affects those sensitivities? If a firm lowers its price, will its total revenue also fall? Are there conditions under which revenue might rise as price falls and what are those? Why? What is an appropriate measure of the total value consumers or producers receive from the opportunity to buy and sell goods and services in a free market? How might government intervention reduce that value, and what is an appropriate measure of that loss? What tools are available that help us frame the trade-offs that consumers and investors face as they must give up one opportunity to pursue another? Is it reasonable to expect markets to converge to an equilibrium price? What are the conditions that would make that equilibrium stable or unstable in response to external shocks? How do different types of auctions affect price discovery? This reading is organized as follows. Section 2 explains how economists classify markets. Section 3 covers the basic principles and concepts o

Annotation 1744605154572

This reading is organized as follows.

Section 2 explains how economists classify markets.

Section 3 covers the basic principles and concepts of demand and supply analysis of markets.

Section 4 introduces measures of sensitivity of demand to changes in prices and income.

Prerequisite Reading Demand and Supply Analysis: Introduction
s to converge to an equilibrium price? What are the conditions that would make that equilibrium stable or unstable in response to external shocks? How do different types of auctions affect price discovery? <span>This reading is organized as follows. Section 2 explains how economists classify markets. Section 3 covers the basic principles and concepts of demand and supply analysis of markets. Section 4 introduces measures of sensitivity of demand to changes in prices and income. <span><body><html>

Annotation 1744607513868

The theory of the firm , the subject of this reading, is the study of the supply of goods and services by profit-maximizing firms. Conceptually, profit is the difference between revenue and costs. Revenue is a function of selling price and quantity sold, which are determined by the demand and supply behavior in the markets into which the firm sells/provides its goods or services. Costs are a function of the demand and supply interactions in resource markets, such as markets for labor and for physical inputs. The main focus of this reading is the cost side of the profit equation for companies competing in market economies under perfect competition. A subsequent reading will examine the different types of markets into which a firm may sell its output.

Prerequisite Demand and Supply Analysis: The firm
icroeconomics gives rise to the theory of the consumer and theory of the firm as two branches of study. The theory of the consumer is the study of consumption—the demand for goods and services—by utility-maximizing individuals. <span>The theory of the firm , the subject of this reading, is the study of the supply of goods and services by profit-maximizing firms. Conceptually, profit is the difference between revenue and costs. Revenue is a function of selling price and quantity sold, which are determined by the demand and supply behavior in the markets into which the firm sells/provides its goods or services. Costs are a function of the demand and supply interactions in resource markets, such as markets for labor and for physical inputs. The main focus of this reading is the cost side of the profit equation for companies competing in market economies under perfect competition. A subsequent reading will examine the different types of markets into which a firm may sell its output. The study of the profit-maximizing firm in a single time period is the essential starting point for the analysis of the economics of corporate decision making. Furthermore,

Annotation 1744609086732

The study of the profit-maximizing firm in a single time period is the essential starting point for the analysis of the economics of corporate decision making. Furthermore, with the attention given to earnings by market participants, the insights gained by this study should be practically relevant. Among the questions this reading will address are the following:

• How should profit be defined from the perspective of suppliers of capital to the firm?

• What is meant by factors of production?

• How are total, average, and marginal costs distinguished, and how is each related to the firm’s profit?

• What roles do marginal quantities (selling prices and costs) play in optimization?

Prerequisite Demand and Supply Analysis: The firm
f this reading is the cost side of the profit equation for companies competing in market economies under perfect competition. A subsequent reading will examine the different types of markets into which a firm may sell its output. <span>The study of the profit-maximizing firm in a single time period is the essential starting point for the analysis of the economics of corporate decision making. Furthermore, with the attention given to earnings by market participants, the insights gained by this study should be practically relevant. Among the questions this reading will address are the following: How should profit be defined from the perspective of suppliers of capital to the firm? What is meant by factors of production? How are total, average, and marginal costs distinguished, and how is each related to the firm’s profit? What roles do marginal quantities (selling prices and costs) play in optimization? This reading is organized as follows: Section 2 discusses the types of profit measures, including what they have in common, how they differ, and their us

Annotation 1744611446028

This reading is organized as follows:

Section 2 discusses the types of profit measures, including what they have in common, how they differ, and their uses and definitions.

Section 3 covers the revenue and cost inputs of the profit equation and the related topics of breakeven analysis, shutdown point of operation, market entry and exit, cost structures, and scale effects. In addition, the economic outcomes related to a firm’s optimal supply behavior over the short run and long run are presented in this section.

Prerequisite Demand and Supply Analysis: The firm
n? How are total, average, and marginal costs distinguished, and how is each related to the firm’s profit? What roles do marginal quantities (selling prices and costs) play in optimization? <span>This reading is organized as follows: Section 2 discusses the types of profit measures, including what they have in common, how they differ, and their uses and definitions. Section 3 covers the revenue and cost inputs of the profit equation and the related topics of breakeven analysis, shutdown point of operation, market entry and exit, cost structures, and scale effects. In addition, the economic outcomes related to a firm’s optimal supply behavior over the short run and long run are presented in this section. <span><body><html>

Annotation 1744625339660

The focus of this reading is on the short-term aspects of corporate finance activities collectively referred to as working capital management . The goal of effective working capital management is to ensure that a company has adequate ready access to the funds necessary for day-to-day operating expenses, while at the same time making sure that the company’s assets are invested in the most productive way. Achieving this goal requires a balancing of concerns. Insufficient access to cash could ultimately lead to severe restructuring of a company by selling off assets, reorganization via bankruptcy proceedings, or final liquidation of the company. On the other hand, excessive investment in cash and liquid assets may not be the best use of company resources.

Parent (intermediate) annotation

Open it
The focus of this reading is on the short-term aspects of corporate finance activities collectively referred to as working capital management . The goal of effective working capital management is to ensure that a company has adequate ready access to the funds necessary for day-to-day operating expenses, while at the same time making sure that the company’s assets are invested in the most productive way. Achieving this goal requires a balancing of concerns. Insufficient access to cash could ultimately lead to severe restructuring of a company by selling off assets, reorganization via bankruptcy proceedings, or final liquidation of the company. On the other hand, excessive investment in cash and liquid assets may not be the best use of company resources. Effective working capital management encompasses several aspects of short-term finance: maintaining adequate levels of cash, converting short-term assets (i.e., accounts re

Original toplevel document

Reading 38  Working Capital Management Intro

Annotation 1744631368972

Effective working capital management encompasses several aspects of short-term finance:
1. Maintaining adequate levels of cash.
2. Converting short-term assets (i.e., accounts receivable and inventory) into cash.
3. Controlling outgoing payments to vendors, employees, and others.

To effectively manage their Workin Capital, companies invest short-term funds in working capital portfolios of short-dated, highly liquid securities, or they maintain credit reserves in the form of bank lines of credit or access to financing by issuing commercial paper or other money market instruments.

Parent (intermediate) annotation

Open it
g of a company by selling off assets, reorganization via bankruptcy proceedings, or final liquidation of the company. On the other hand, excessive investment in cash and liquid assets may not be the best use of company resources. <span>Effective working capital management encompasses several aspects of short-term finance: maintaining adequate levels of cash, converting short-term assets (i.e., accounts receivable and inventory) into cash, and controlling outgoing payments to vendors, employees, and others. To do this successfully, companies invest short-term funds in working capital portfolios of short-dated, highly liquid securities, or they maintain credit reserves in the form of bank lines of credit or access to financing by issuing commercial paper or other money market instruments. Working capital management is a broad-based function. Effective execution requires managing and coordinating several tasks within the company, including managing short-term

Original toplevel document

Reading 38  Working Capital Management Intro

Annotation 1744633466124

Working capital management is a broad-based function. Effective execution requires managing and coordinating several tasks within the company, including managing short-term investments, granting credit to customers and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires reliable cash forecasts, as well as current and accurate information on transactions and bank balances.

Parent (intermediate) annotation

Open it
ds in working capital portfolios of short-dated, highly liquid securities, or they maintain credit reserves in the form of bank lines of credit or access to financing by issuing commercial paper or other money market instruments. <span>Working capital management is a broad-based function. Effective execution requires managing and coordinating several tasks within the company, including managing short-term investments, granting credit to customers and collecting on this credit, managing inventory, and managing payables. Effective working capital management also requires reliable cash forecasts, as well as current and accurate information on transactions and bank balances. <span><body><html>

Original toplevel document

Reading 38  Working Capital Management Intro

Annotation 1744639495436

Corporate governance provides a framework that defines the rights, roles and responsibilities of various groups within an organization. At its core, corporate governance is the arrangement of checks, balances, and incentives a company needs in order to minimize and manage the conflicting interests between insiders and external shareowners.”

Corporate Governance Overview
Corporate governance can be defined as: “the system of internal controls and procedures by which individual companies are managed. It provides a framework that defines the rights, roles and responsibilities of various groups . . . within an organization. At its core, corporate governance is the arrangement of checks, balances, and incentives a company needs in order to minimize and manage the conflicting interests between insiders and external shareowners.”

3.1.2 Creditors