CHAPTER 27
1. Finance: Finance is a term that covers the broadest possible range of aspects of money management. To discuss finance can range from discourse over something as vast as a nation’s GDP to the struggle of a minimum-wage worker to get a loan to buy a beat-up used car.

2. Present Value: Also referred to as discounted value, the present value reveals the actual value of set amount of money in reference to its future worth. An example would be that one person getting a gift of $100 today and another being promised a gift of $100 a year from now places the immediate gift at a higher present value because theoretically that money could be invested over the next year to make it worth far more than $100.

3. Future value: A calculation of the value of money received today at a future point in time based on existing interest or exchanges rates. An essential component in determining future value is the addition of compounded interest over simple interest.

4. Compounding: Interest is earned money that already exists. Compounding is interest on the interest which then produces more money on which more interest can be earned. Thus, compound interest is far preferable to simple interest.

5. Risk Aversion: The inability to take a chance on potentially great revenue-producing opportunities because the initial risk of losing money outweighs the apparent capacity to earn money. Those with risk aversion would generally stick to investments deemed safer or at least more conservative like bonds than risky entrepreneurial startups.

6. Diversification: What could almost be defined as a less constrictive sort of risk aversion in one who diversifies seems to reduce the potential for loss in one investment by making it up in another investment. The best possible diversification of investments would be that in which two completely antagonistic bets on the future are made, yet somehow both pay off equally well.

7. Firm- specific risk: Making a risky investment in just one company. This is done so that an entire portfolio won’t be put at risk when there the potential for a huge payoff by reducing the risk to just one specific entity.

8. Market Risk: An outbreak of bird flu would affect certain industries or even certain sectors to a significant degree while leaving the majority of businesses absolutely unaffected. A market risk would be one capable of affecting every sector and industry if not necessarily equally and it not necessarily every business within that industry or sector.

9. Fundamental analysis: The most basic sort of accounting investigation into a potential investment target. The type of analysis that is the absolute best that most investors can hope for; the type of analysis that big time investors would consider fairly worthless.

10. Efficient markets hypothesis: Essentially, the economic theory that suggests any attempt to outperform the market is merely a crapshoot based on the belief that an efficient market accurately reflects all known pertinent securities information.

CHAPTER 28
Labor Force: Everyone over the age of 16 who is either employed or unemployed with the exception of those institutionalized, serving in the military or incapacitated from becoming an active member of the work force.

Unemployment Rate: That percentage who make up the labor force (see above) who are not employed.

Labor-Force Participation rate: The opposite of the unemployment rate; the percentage of the labor force that is an actively employed member of the labor force.

Natural Rate of Unemployment: The actual rate of employment divorced from cyclical effects of employment.

Cyclical unemployment: When economic times turn bad and there is not enough spending and consumption going on to warrant companies hiring to reach their full capacity, it is known as cyclical unemployment. The very term cyclical is indicative of a usually short and finite term of such conditions.

Discouraged workers: Those workers who simply give up looking for jobs after a certain extended period of being unable to find employment.

Frictional Unemployment: Essentially the term of unemployment that results when a person is laid off from the job they are educated or experienced or skilled at doing and wait until they can find a job requiring those skills before rejoining the labor force.

Structural Unemployment: Unemployment that results from too many people who share the same skill set trying to get too few jobs to allow for full employment.

Job Search: The various ways in which those who are not employed go about trying to find a job. Examples can range from following upon help wanted classifieds to resume blasting to asking your dad to put in a good word you with his old college chum who is now a Congressman.

Unemployment insurance: Federal program that funds only the most basic of needs for those who have lost certain types of jobs; jobs that do not include those associated with self-employment or part time hours.