What the Kelly criterion says — bet f* = (bp - q)/b of your bankroll, where b is odds, p is probability of winning

What the 50/30/20 budget rule suggests — 50% needs, 30% wants, 20% savings

Allocate 50% income to essentials, 30% to discretionary spending, and 20% to savings

What time value of money means — $100 today is worth more than $100 in the future

Present value exceeds future value due to potential earning capacity

What the efficient frontier is — the set of portfolios with maximum return for each risk level

The efficient frontier represents optimal portfolios with highest returns for given risk levels

What reserve requirements do — mandate how much cash banks must hold against deposits

Reserve requirements dictate the percentage of deposits banks must keep as cash reserves

What anchoring does in investing — the purchase price biases your sell decision

Anchoring bias causes investors to base sell decisions on initial purchase price rather than current market value

What the endowment effect causes — you value what you own more than what you don't

The endowment effect leads to overvaluation of owned items compared to identical alternatives