--%>
Assignment Help - homework help

Why is the money given time value

Why is the money given time value?

E

Expert

Verified

a) Positive interest rates show that the money has time value. If one person lets another person borrows money, the first will person need the compensation in exchange for dropping current consumption.
b) The individual who has borrowed the money is ready to pay the increase current consumption.  The return rate which is required for an investment shows the pure time value of money, any risk premiums present and an adjustment for expected inflation.

   Related Questions in Financial Management

  • Q : An example of distribution of

    Illustrates an example of distribution of individual numbers or random numbers.

    		•
  • Q : Estimate the minimum price in rational

    Suppose spot Swiss franc is $0.7000 and the six-month forward rate is $0.6950. Estimate the minimum price which a six-month American put option along with a striking price of $0.6800 must sell for in a rational market? Suppose the annualized six-month Eurodo

    		•
  • Q : Explain the stochastic volatility in an

    Explain the stochastic volatility in an option-pricing.

    		•
  • Q : Marginal cost of capital schedule What

    What is MCC (marginal cost of capital schedule)? The schedule is always a horizontal line. Elaborate.

    		•
  • Q : Describe Euronote market Describe

    Describe Euronote marketEuronotes are short-term notes written through a group of international investment or commercial banks termed a “facility.”  A client-borrower makes an agreement along with a facility to issue Euronotes i

    		•
  • Q : BEP From books of Aggarwal Bors,

    From books of Aggarwal Bors, following information has been extracted: Rs. Sales 2,40,000 Variable costs 1,44,000 Fixed costs 26,000 Profit before tax 70,000 Rate of tax 40% Firm is proposing to buy the new plant that could generate extra annual profit of Rs. 10,000. The fixed cost of new plant is e

    		•
  • Q : With whom Sharpe is shared Nobel Prize

    With whom Sharpe is shared Nobel Prize (1990)?

    		•
  • Q : Calculate rate of return on investment

    In May 1995, Japan Life Insurance Company invested $10,000,000 in pure-discount U.S. bonds while the exchange rate was 80 yen per dollar. The company liquidated the investment one year afterwards for $10,650,000. The exchange rate turned out 110 yen per dollar

    		•
  • Q : Foreign exchange transactions among

    How are foreign exchange transactions among international banks settled?The interbank market is network of correspondent banking relationships, along with large commercial banks maintaining demand deposit accounts along with one another, known a

    		•
  • Q : Why is actual volatility not easy to

    Why is actual volatility not easy to measure?

    		•