In Chapter 1,Principle 3 Espouses the Time Value of Money

question 48

Multiple Choice

In Chapter 1,Principle 3 espouses the time value of money.Why is this principle so important to financial planning?

• A)The principle allows us to determine how much money we will need to achieve our future goals.
• B)The principle shows us how inflation impacts our money over time.
• C)The principle helps us determine our savings needs today,in order to meet our future retirement goals.
• D)The principle shows us how important time and interest rates are to the accumulation of wealth.
• E)All of the above.

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Definitions:

Value

The importance, worth, or usefulness of something, often measured in terms of money or utility.

Underlying Stock

Refers to the stock on which options contracts and other derivatives are based, and whose price movements they follow.

Call Increases

Situations where the price of call options rises, typically due to an increase in the price of the underlying asset.

Value

The quantitative or qualitative worth, significance, or utility of something.