Value of Money a Common Term Paper

Open, View, and/or
Download this Document

Total Length: 580 words ( 2 double-spaced pages)

Total Sources: 0

Page 1 of 2

Although this does not necessarily have an immediate monetary translation, it shows that the individual will prefer to receive his money and dispose of them earlier rather than later on.

On the other hand, we can indeed see that the present value of money is greater if we can deposit the money received at time t0 to a simple deposit account, with a certain interest rate. We will expect that amount of money to gradually increase over time and to reach a higher value some time in the future. As we can see from this example, the time value of money does not only fluctuate, but actually increases from moment t0 to moment t1.

3. Does one always earn the yield to maturity on bonds? Explain.

Not necessarily. In order to best explain this, we need to further clarify the concept of yield to maturity on bonds.

Stuck Writing Your "Value of Money a Common" Term Paper?

View All Our Example Value of Money a Common Term Paper

Have A Custom Example Essay Written

The final yield to maturity will be composed of a composite rate of all payouts, coupon and capital gain/loss. The capital gain/loss will be determined by the market value and will be calculated as the difference between the bond value and the value that is actually paid (which is the market value).

The reason why the yield to maturity can actually turn into a loss is due to the fluctuations of the bond price on the open market. If the price of the bond drops significantly on the market, then, despite the accumulated coupons and payouts, the investor may lose on the difference in the actual market value of the bond, which may turn out a loss higher than….....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Value Of Money A Common" (2007, November 12) Retrieved May 21, 2025, from
https://www.aceyourpaper.com/essays/value-money-common-34409

Latest MLA Format (8th edition)

Copy Reference
"Value Of Money A Common" 12 November 2007. Web.21 May. 2025. <
https://www.aceyourpaper.com/essays/value-money-common-34409>

Latest Chicago Format (16th edition)

Copy Reference
"Value Of Money A Common", 12 November 2007, Accessed.21 May. 2025,
https://www.aceyourpaper.com/essays/value-money-common-34409
   

Open, View, and/or
Download this Document
order custom essay example