Edev 311: Economic Development: Session 5: The Basic Tools of Finance
Edev 311: Economic Development: Session 5: The Basic Tools of Finance
Edev 311: Economic Development: Session 5: The Basic Tools of Finance
DEVELOPMENT
SESSION 5: THE BASIC TOOLS OF FINANCE
What is Finance?
FYI: Rule of 70
According to the rule of 70, if some variable grows at a rate of x percent
per year, then that variable doubles in approximately 70/x years.
MANAGING RISK
A person is said to be risk averse if she exhibits a dislike of
uncertainty.
Individuals can reduce risk choosing any of the following:
Buy insurance
Diversify
Accept a lower return on their investments
The Markets for Insurance