Introduction - Time Value of Money- Let’s say that you are given a choice to receive $100 today or $100 one year from now. Which choice ...
COURSE
Time Value of Money
This CFA Level I reading provides an introduction to the concepts and techniques of time value of money. These techniques are a fundamental tool for financial analysis, corporate finance, valuation, and other investment decisions.
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Study Notes for CFA Level I - The Time Value of Money
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- Interest rates are how we measure the time value of money. While making an investment, an investor w...
- The required interest rate that an investor earns from an investment is made up of various component...
- When you go to a bank enquiring about the deposit rates, the rates specified by the bank can be expr...
- Let’s first review the time value money concept using a very simple example. ### Example 1 Let’s s...
- Future value of a single cash flow refers to how much a single cash flow today would grow to over a ...
- Present value of a single cash flow refers to how much a single cash flow in the future will be wort...
- An annuity refers to a series of equal cash flows that occur periodically such as monthly, quarterly...
- In an annuity due, the first cash flow occurs at the beginning (at time 0). We can use our BA II Plu...
- A perpetuity is a type of annuity that pays equal cash flows that occur periodically such as monthly...
- We have looked at the PV/FV calculations for single sums of money and for annuities in which all the...
- In all the above examples for annuities, we assumed that the compounding frequency is annual. Howeve...
- When solving a time value of money problem, it is sometimes easy to draw a timeline to present the c...
LESSONS
Interest Rates
Interest Rate Equation
Nominal Interest Rate and Effective Yield
Time Value of Money for Different Compounding Freq...
Future Value of a Single Cash Flow
Present Value of a Single Cash Flow
Future Value and Present Value of Ordinary Annuity
Present Value and Future Value of Annuity Due
Present Value of a Perpetuity
Present Value and Future Value of Uneven Cash Flow...
Annuities with Different Compounding Frequencies
Using a Timeline to Solve Time Value of Money Prob...
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