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Students of Computer Science, study E-Commerce as an auxiliary subject. these are the key points discussed in these Lecture Slides of E-Commerce : Interest Rate, Nominal, Consumption, Premiums, Remember Axiom, Additional Risk, Delaying, Investments, Inflation Risk, Business Risk
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where
real risk-free rate of interest or return for delayingconsumption - premiums for taking on additional risk - Remember Axiom 1
If interest rates are down,the expected return onother investments goesdown.
If interest rates are up,the expected return onother investment goesup.
Risk that rising prices will erodepurchasing power
Closely linked to interest raterisk because of the effect ofinflation on interest rates - Almost impossible to eliminate - Choose securities with a returnhigher than the expectedinflation rate
The risk associatedwith the company’suse of debt.
Remember thehierarchy ofpayments.
Risk that results formvarying exchange rates.
Very important for theinternational investor. - Virtually eliminated byinvesting in domesticcompanies with little orno foreign connection.
