The Time Value of Money Is Created by [Blank]

question 19

Multiple Choice

The time value of money is created by [blank].

• A)the existence of profitable investment alternatives and interest rates
• B)the fact that the passing of time increases the value of money
• C)the elimination of the opportunity cost as a consideration
• D)the fact that the value of saving money for tomorrow could be more or less than spending it today

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Definitions:

Premium

The amount paid for an insurance policy, above the standard cost or for bonds, it's the amount by which the bond's selling price exceeds its face value.

Discount

A reduction from the usual cost of something, typically applied to incentivize purchase or payment within a certain timeframe.

Bonds Payable

A long-term liability account on a company's balance sheet representing the amount it owes to bondholders by the maturity date, typically including loans or other forms of debt obtained through issuing bonds.

Contra Account

An account used in financial reporting to reduce the value of a related account when the two are netted together.