Effects of combining securities in portfolio analysis slide share
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Money has time value. In simpler terms, the value of a certain amount of money today is more valuable than its value tomorrow. It is not because of the uncertainty involved with time but purely on account of timing. The difference in the value of money today and tomorrow is referred to as the time value of money.
Money has time value because of the following reasons:
Risk and Uncertainty
Future is always uncertain and risky. Outflow of cash is in our control as payments to parties are made by us. There is no certainty for future cash inflows. Cash inflows are dependent on our Creditor, Bank etc. As an individual or firm is not certain about future cash receipts, it prefers receiving cash now.
Money has time value because of the following reasons:
Risk and Uncertainty
Future is always uncertain and risky. Outflow of cash is in our control as payments to parties are made by us. There is no certainty for future cash inflows. Cash inflows are dependent on our Creditor, Bank etc. As an individual or firm is not certain about future cash receipts, it prefers receiving cash now.
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