According to the Concept of the Time Value of Money

question 334

Multiple Choice

According to the concept of the time value of money,

• A) money is more valuable to a person the sooner it is received.
• B) money is more valuable to a person the later it is received.
• C) people are indifferent between receiving a given sum of money now versus receiving it later.
• D) there is no opportunity cost of receiving a sum of money later rather than sooner.

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Definitions:

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash.

Retained Earnings

The portion of a company's profits that is held or retained and not paid out as dividends to shareholders.

Shareholder Wealth

The overall value for shareholders; it is often measured by the share price of a company multiplied by the number of shares outstanding.