No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Sixteen: Valuing the Future - Concepts in Capital & Finance 392 DESIRED LEARNING OBJECTIVES At the conclusion of this chapter, the student should be able to... § § Describe how the plans of Acting Man are necessary to turn capital assets into capital. § § Calculate the present value of payments made in the future. § § Calculate the future value of an amount of money held in the present. § § Describe the tradeoff between risk and return. § § Explain the concept of compound interest. § § Compare and contrast the two primary methods of modern finance (stocks and bonds). § § Describe the efficient market hypothesis and its implications for personal investment.