D076 - Finance for Managers Part 2
agency problem - ✔✔✔when the agency (management) doesn't act in the best interests of the
principal (owners)
APR - ✔✔✔Annual percentage rate; the annual rate of interest that is charged for using credit
coincident economic indicators - ✔✔✔indicators that show the current state of the economy, used
jointly with leading and lagging indicators
compound interest - ✔✔✔total interest = principal times (1+interest rate)^# of periods - principal
examples of coincident economic indicators - ✔✔✔GDP, personal income
examples of lagging economic indicators - ✔✔✔unemployment rate, consumer price index
examples of leading economic indicators - ✔✔✔yield curve, stock market return
how are stock market returns a leading economic indicator? - ✔✔✔a rising market shows an improving
economy while a declining market shows a worsening economy
how does CPI indicate economic state? - ✔✔✔a rising consumer price index means inflation, while a
falling one indicates deflation
lagging economic indicators - ✔✔✔indicate the changes/patterns in the economy over time; identify
long-term trends
leading economic indicators - ✔✔✔occur before the economy changes; used to avoid economic events
agency problem - ✔✔✔when the agency (management) doesn't act in the best interests of the
principal (owners)
APR - ✔✔✔Annual percentage rate; the annual rate of interest that is charged for using credit
coincident economic indicators - ✔✔✔indicators that show the current state of the economy, used
jointly with leading and lagging indicators
compound interest - ✔✔✔total interest = principal times (1+interest rate)^# of periods - principal
examples of coincident economic indicators - ✔✔✔GDP, personal income
examples of lagging economic indicators - ✔✔✔unemployment rate, consumer price index
examples of leading economic indicators - ✔✔✔yield curve, stock market return
how are stock market returns a leading economic indicator? - ✔✔✔a rising market shows an improving
economy while a declining market shows a worsening economy
how does CPI indicate economic state? - ✔✔✔a rising consumer price index means inflation, while a
falling one indicates deflation
lagging economic indicators - ✔✔✔indicate the changes/patterns in the economy over time; identify
long-term trends
leading economic indicators - ✔✔✔occur before the economy changes; used to avoid economic events
