Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 9 The Real Economy in the Long Run
Chapter 27 of 36 Basic Tools of Finance
Section 2 of 16
…
Almost everyone eventually deals with the economy's financial system, including:
· deposit savings in a bank account
· take out a mortgage to buy a house
· invest in stocks, bonds, and funds for retirement account
There are two related elements in almost all financial decisions: time and risk.
The financial system coordinates the economy's saving and investment which are main determinants of economic growth.
The financial system involves decisions and actions we make and take today that affect our lives in the future.
But, we cannot know the future.
When a person decides to save money for retirement or a firm decides to borrow money for an investment the decision is based on a guess about the likely future result.
The actual end result can be very different from what was expected.
…
In this chapter some tools are introduced that help us understand the decisions people make when they participate in financial markets.
Knowledge of the basic concepts and tools of finance is key to understanding how the economy works.
This knowledge is also helpful for making personal financial decisions.
This chapter covers three topics:
· comparison of sums of money at different points in time
· management of risk
· time and risk analysis to examine what determines the value of an asset
… …
risk management
risuku kanri
リスク管理

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