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| Paying for new additional to capital stock or new replacements for capital stock worn out. example new factories, houses, retail stores, construction equip |
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| Buying as asset or building on asset for a financial gain does not distinguish between new or old asset, does not matter if purchasing an asset adds to the capital stock replaces the capital stock or does neither |
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| ownership claim to a company you get the right to vote in meetings |
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| When an investor sells a share of a stock for more then they paid for it |
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| Payment of a corporation profit |
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| If a company goes bankrupt and owes more then the value of a fund assets shareholders do not owe anything |
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| Debt contracts issued by the government a corparation |
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| a company that maintain a professionally managed portfolio |
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when investors try to take advantage and profit from situation in which 2 identical or nearly identical assets have different rate of return
Buys the asset with a high rate of return and sell the one with the low rate of return |
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| Uncertainty of future payment |
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| the strategy of investing in a large number of investment or varity to risk to reduce the risk of the portfolio |
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Definition
1. diverifiable risk - risk specific to an investment that can be eliminated by diversification
2. non-diversifiable risk - risk that pushes all investment in some direction as the same time and cannot be solved |
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1. Average expected rate of return
2. Beta (compares a given asset to a portfolio) |
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| defines the relationship between avg expected rate of return and risk levels that must hold for all assets and all portfolios trading in the financial market |
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| Rate the compare for time preference |
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| Chemicals, agr products, aircraft, comsumer, durables, service |
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| Automobiles, metals, HH apliances, Computeres, petrolium |
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| 3 facts that lead to trade |
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Definition
1. The distribution of natural, human, and capital resources in uneven across nations
2. There are difference in technology across nations and efficient prod requires diff techonology
3. people prefer products that may not domestic |
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| Textiles, electronics, toys, apperal, sporting goods |
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| Airplanes, auto, agr equip, machines, chemicals |
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| when a country is the most efficient producer of a product |
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| when a country can produce at a lower opportunity cost than another country |
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Definition
1. A revenue tariff- tariff on a good not produced domesticalle
2. Protective tariff- tariff to shild domestic producers from foreign competition |
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Definition
| a limit on the quantity of items imported |
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| licesing requirement of unreasonable standard perramins to product quantity or even bureacratic delay in custum |
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| Voluntary export restriction |
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| agreed to by exports to avoid strigent tariff or quatas |
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| govt payment to a domestic producers of export goods to aid that product |
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| with free trade US consumes 25 t shirts w teriff we now cosume 20 tshirts |
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| increased domestic production |
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Definition
| With free trade US producers make 5 tshirts, now they make 10 |
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| we now only import 10 tshirts instead of 20 with free trade and the extra you pay for the tshirt goes to the government |
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