Final EXAM Financial Math Semester 1

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What is the definition of a Large Cap company?

Back

A Large Cap company is a corporation with a market capitalization of $10 billion or more, typically considered to be stable and established.

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What is the Sunk Cost Fallacy?

Back

The Sunk Cost Fallacy is a cognitive bias where individuals continue an endeavor once an investment in money, effort, or time has been made, regardless of the current costs.

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What is the Domino Effect in financial contexts?

Back

The Domino Effect refers to a situation where one event causes a chain reaction of similar events, often leading to negative consequences.

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What is zero-based budgeting?

Back

Zero-based budgeting is a budgeting method where all expenses must be justified for each new period, starting from a 'zero base'.

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Why do investors shift towards bonds as they age?

Back

Investors shift towards bonds to protect the principal of their portfolio and provide a stable income during retirement.

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What is the definition of Mid Cap companies?

Back

Mid Cap companies are those with a market capitalization between $2 billion and $10 billion, often seen as a balance between growth and stability.

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What is the definition of a Micro Cap company?

Back

Micro Cap companies are those with a market capitalization of less than $300 million, often considered high-risk investments.

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What is the definition of a Small Cap company?

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Small Cap companies have a market capitalization between $300 million and $2 billion, typically offering higher growth potential but also higher risk.

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What is Loss Aversion?

Back

Loss Aversion is a principle in behavioral economics that suggests people prefer to avoid losses rather than acquiring equivalent gains.

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What is Hedonic Adaptation?

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Hedonic Adaptation is the observed tendency of humans to quickly return to a relatively stable level of happiness despite major positive or negative events.