Time Value of money: An introduction
9 important questions on Time Value of money: An introduction
What does the law of one price state?
states that in competitive markets, the same good or securities
must have the same price.
What is meant with arbitrage opportunity?
Any situation in which it is possible to make a profit without taking any risk or making any investment.
What is another discription for time value of money?
difference in value between money received today and money received in the future; also, the observation that two cash flows at two different points in time have different values.
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What is the present value(PV)?
What is the future value (FV)?
If we express it in terms of dollars in the future
What is a time line in financial terms?
What is the formula to find n?
We must discount in an earlier point of time. How do we do that?
Finding the equivalent value today of a future cash flow by multiplying by a discount factor,or equivalently, dividing by 1 plus the discount rate.
How do you quantify the cost and benefits
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