Which of the following concepts is true regarding the time value of money? 1. Present value represents the current value of a future amount of money given a specified rate of return. II. When time periods are less than one year, the time value of money may be ignored. III. When time periods are longer than one year, assets and liabilities are valued at the present value of future payments. IV. When the present value is more than the amount which will ultimately be paid/received, the difference is called a "discount".
Which of the following concepts is true regarding the time value of money? 1. Present value represents the current value of a future amount of money given a specified rate of return. II. When time periods are less than one year, the time value of money may be ignored. III. When time periods are longer than one year, assets and liabilities are valued at the present value of future payments. IV. When the present value is more than the amount which will ultimately be paid/received, the difference is called a "discount".
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Which of the following concepts is true regarding the time value of money?
1. Present value represents the current value of a future amount of money given a specified rate of return.
II. When time periods are less than one year, the time value of money may be ignored.
III. When time periods are longer than one year, assets and liabilities are valued at the present value of future payments.
IV. When the present value is more than the amount which will ultimately be paid/received, the difference is called a "discount".
Multiple Choice
I and IV only are true
All of the above statements are true
I, II and III are true but IV is false
I and II only are true
All of the above statements are false
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