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The four basic principles of finance are the time value of money, risk and return, diversification, and market efficiency. The time value of money emphasizes that a dollar today is worth more than a dollar in the future due to its potential earning capacity. Risk and return highlight the relationship between the potential risk of an investment and its expected returns. Diversification involves spreading investments across various assets to reduce risk, while market efficiency suggests that asset prices reflect all available information, making it difficult to consistently achieve higher returns than the market average.

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