Finance ii (UNI)

Question 1

Macroeconomics =

Answer 1

Studies the behaviour of economics and the influence of economic policies on an aggregated level, addressing themes like growth, inflation, and employment.

Question 2

Microeconomics =

Answer 2

Studies the economic behavior of individuals and companies.
Central idea: the price of products and services is established in a competitive market where demand meets supply.
> 2 important factors that influence the price of a product are utility & costs

Question 3

Homo economicus =

Answer 3

The portrayal of humans as agents who are consistently rational and narrowly self-interested, and who pursue their subjectively defined ends optimally.

Question 4

Bounded rationality =

Answer 4

The decision maker’s cognitive limitations of both knowledge and computational capacity.

Question 5

Prospect theory =

Answer 5

Describes the way people make choices between probabilistic alternatives that involve risk and conclude that the ‘rational agent’ is a figment of our imagination.

Question 6

MCAP =

Answer 6

Market capitalization.

Question 7

Pareto efficiency =

Answer 7

When an economy has its resources and goods allocated to the maximum level of efficiency, and no change can be made without making someone worse off.

Question 8

The Coase theorem =

Answer 8

Describes the economic efficiency of an economic allocation or outcome in the presence of externalities.
> Significant theory, because if true; the conclusion is that it is possible for private individuals to make choices that can solve the problem of market externalities.

Question 9

Ad hoc analysis =

Answer 9

A type of data exploration that uses both quantitative and qualitative methods to uncover new insights.
> It can include predictive modeling, data mining, statistical testing, and other techniques used to extract information from large data sets.