Money Has a Time Value Because

question 243

Multiple Choice

Money has a time value because

• A) inflation increases the value of money over time.
• B) money earns interest over time.
• C) monetary systems are more automated than in the past.
• D) a dollar received today is worth more than a dollar received yesterday.

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Definitions:

Bid Price

The highest price a buyer is willing to pay for a security or asset.

Treasury Bill

A short-term government security issued at a discount from the face value and matures at par, providing a return to the holder at maturity.

Dealer

An individual or firm in the securities business who buys and sells securities for their own account, rather than for customers, thus acting as a principal in the transactions.

Money Market Instrument

Short-term debt instruments, typically with maturities of less than one year, traded in the money market, including treasury bills, commercial paper, and certificates of deposit.