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Financial Terms | |
Time value of money |
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Definition of Time value of moneyTime value of moneyThe idea that a dollar today is worth more than a dollar in the future, because the dollar
Related Terms:Claim dilutionA reduction in the likelihood one or more of the firm's claimants will be fully repaid, CompoundingThe process of accumulating the time value of money forward in time. For example, interest Continuous compoundingThe process of accumulating the time value of money forward in time on a Discrete compoundingCompounding the time value of money for discrete time intervals. Effective annual interest rateAn annual measure of the time value of money that fully reflects the effects of Effective rateA measure of the time value of money that fully reflects the effects of compounding. PaybackThe length of time it takes to recover the initial cost of a project, without regard to the time value of money. ![]() Account ValueThe sum of all the interest options in your policy, including interest. Accumulated ValueAn amount of money invested plus the interest earned on that money. Adjusted present value (APV)The net present value analysis of an asset if financed solely by equity approximated net realizable value at split-off allocationa method of allocating joint cost to joint products using a At-the-moneyAn option is at-the-money if the strike price of the option is equal to the market price of the Benefit ValueThe amount of cash payable on a benefit. Bond valueWith respect to convertible bonds, the value the security would have if it were not convertible Book valueA company's book value is its total assets minus intangible assets and liabilities, such as debt. A BOOK VALUEAn asset’s cost basis minus accumulated depreciation. Book ValueThe value of an asset as carried on the balance sheet of a Book valueAn asset’s original cost, less any depreciation that has been subsequently incurred. book valueNet worth of the firm’s assets or liabilities according book value and book value per shareGenerally speaking, these terms BOOK VALUE OF COMMON STOCKThe theoretical amount per share that each stockholder would receive if a company’s assets were sold on the balance sheet’s date. Book value equals: Book value per shareThe ratio of stockholder equity to the average number of common shares. Book value Book Value per ShareThe book value of a company divided by the number of shares Break-even timeRelated: Premium payback period. business-value-added activityan activity that is necessary for the operation of the business but for which a customer would not want to pay Call money rateAlso called the broker loan rate , the interest rate that banks charge brokers to finance CAPITAL IN EXCESS OF PAR VALUEWhat a company collected when it sold stock for more than the par value per share. Carrying valueBook value. Cash flow time-lineLine depicting the operating activities and cash flows for a firm over a particular period. Cash-surrender valueAn amount the insurance company will pay if the policyholder ends a whole life Cash Surrender ValueThis is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications. Cash Surrender ValueBenefit that entitles a policy owner to an amount of money upon cancellation of a policy. Cash value added (CVA)A method of investment appraisal that calculates the ratio of the net present value of an Conversion valueAlso called parity value, the value of a convertible security if it is converted immediately. cycle timethe time between the placement of an order to Economic Value Added (EVA)Operating profit, adjusted to remove distortions caused by certain accounting rules, less a charge economic value added (EVA)a measure of the extent to which income exceeds the dollar cost of capital; calculated economic value added (EVA)Term used by the consulting firm Stern Stewart for profit remaining after deduction of the cost employee time sheeta source document that indicates, for each employee, what jobs were worked on during the day and for what amount of time Exercise valueThe amount of advantage over a current market transaction provided by an in-the-money Exit valueThe value that an asset is expected to have at the time it is sold at a predetermined Expected valueThe weighted average of a probability distribution. Expected ValueThe value of the possible outcomes of a variable weighted by the Expected value of perfect informationThe expected value if the future uncertain outcomes could be known Extraordinary positive valueA positive net present value. Face valueSee: Par value. Face ValueThe nominal value of a security. Also called the par value. Face valueThe maturity value of a security. Also known as par value, face valuePayment at the maturity of the bond. Also called par value or maturity value. Face ValueThe payoff value of a bond upon maturity. Also called par value. See principal. Face ValueThe nominal value which appears on the face of a document recording an entitlement, generally an amount of money that has to be repaid on the maturity of a debt instrument. Fair market valueThe price that an asset or service will fetch on the open market. Fair Market ValueThe highest price available, expressed in terms of cash, in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to transact. Fair ValueThe amount at which an asset could be purchased or sold or a liability incurred or Fiat MoneyFiat money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category. Firm's net value of debtTotal firm value minus total firm debt. Future valueThe amount of cash at a specified date in the future that is equivalent in value to a specified Future ValueThe amount a given payment, or series of payments, will be worth future valuethe amount to which one or more sums of Future valueThe value that a sum of money (the present value) earning future valueAmount to which an investment will grow after earning interest. Future ValueThe amount to which a payment or series of payments will grow by a given future date when compounded by a given interest rate. FVIF future value interest factor. High-Powered MoneySee money base. Hot moneymoney that moves across country borders in response to interest rate differences and that moves idle timethe amount of time spent in storing inventory or In-the-moneyA put option that has a strike price higher than the underlying futures price, or a call option inspection timethe time taken to perform quality control activities Intrinsic value of a firmThe present value of a firm's expected future net cash flows discounted by the Intrinsic value of an optionThe amount by which an option is in-the-money. An option which is not in-themoney Investment valueRelated:straight value. Just-in-time inventory systemsSystems that schedule materials/inventory to arrive exactly as they are just-in-time (JIT)a philosophy about when to do something; Just-in-time (JIT)A cluster of manufacturing, design, and delivery practices designed to Just-in-time manufacturingThe term for several manufacturing innovations that just-in-time manufacturing systema production system that attempts to acquire components and produce inventory only as needed, to minimize product defects, and to just-in-time traininga system that maps the skill sets employees lead timesee cycle time Liquidation valueNet amount that could be realized by selling the assets of a firm after paying the debt. Liquidation ValueThe net proceeds (after taxes and expenses) of selling the assets liquidation valueNet proceeds that would be realized by selling the firm’s assets and paying off its creditors. Loan valueThe amount a policyholder may borrow against a whole life insurance policy at the interest rate Market timerA money manager who assumes he or she can forecast when the stock market will go up and down. Market value1) The price at which a security is trading and could presumably be purchased or sold. Market valueThe price at which a product or service could be sold on the open market. Market ValueA quoted market price per unit times the number of units being valued. Synonymous market value addedMarket value of equity minus book value. market-value balance sheetFinancial statement that uses the market value of all assets and liabilities. Market value ratiosRatios that relate the market price of the firm's common stock to selected financial Market value-weighted indexAn index of a group of securities computed by calculating a weighted average Maturity valueRelated: par value. MoneyAny item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange. Money baseComposed of currency and coins outside the banking system plus liabilities to the deposit money banks. Money BaseCash plus deposits of the commercial banks with the central bank. Money center banksBanks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds. Money LaunderingThis is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins. Money managementRelated: Investment management. Money managerRelated: Investment manager. Money marketmoney markets are for borrowing and lending money for three years or less. The securities in Money MarketA market that specializes in trading short-term, low-risk, very liquid Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |