Asked by Dylan Wright on May 21, 2024
Verified
The concept of present value is that an amount of cash to be received at some date in the future is the equivalent of the same amount of cash held at an earlier date.
Present Value
The immediate value of a prospective sum of money or stream of cash flows, using a specific interest rate for calculation.
Equivalent
A term expressing a state of equality or equivalency in value, function, or meaning.
Cash Held
Physical money held by a business in its cash registers or cash box, used for daily operations.
- Understand the importance of the time value of money in assessing bond value.
- Gain a comprehensive understanding of present value concepts and their use in the analysis of bonds and calculation of interest.
Verified Answer
DC
Dominic CiprianoMay 27, 2024
Final Answer :
False
Explanation :
The concept of present value is that a future amount of cash is worth less than an equivalent amount of cash held today, due to the potential earning capacity of the money over time.
Learning Objectives
- Understand the importance of the time value of money in assessing bond value.
- Gain a comprehensive understanding of present value concepts and their use in the analysis of bonds and calculation of interest.