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Investment, Time,
and Capital Markets - Coggle Diagram
Investment, Time,
and Capital Markets
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Value of a Bond
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Perpetuity: Bond paying out a fixed amount of money each year, forever
Stocks versus Flows
Capital is measured as a stock, i.e., as a quantity of plant and equipment that the firm owns
Inputs of labor and raw materials, on the other hand, are measured as flows. The output of the firm is also a flow.
Adjustments for Risk
Nondiversifiable risk: Risk that cannot be eliminated by investing in many projects or by holding the stocks of many companies
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Diversifiable risk: Risk that can be eliminated either by investing in many projects or by holding the stocks of many companies
