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Warning
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LSDefine
Simple English definitions for legal terms
time value
Read a random definition: ownership-in-place theory
A quick definition of time value:
Time value refers to the price that an investor pays for the amount of time they have to wait until their investment matures or earns income. It is the cost of waiting for a return on investment. This is different from yield to maturity, which is the total return an investor can expect if they hold the investment until it matures.
A more thorough explanation:
Time value refers to the price an investor pays for the length of time they have to wait until their investment matures or earns income. It is also known as the cost of waiting.
For example, if an investor buys a bond that will mature in 10 years, the time value is the cost associated with waiting for 10 years to receive the principal and interest payments. The longer the time until maturity, the higher the time value.
Another example is a savings account that earns interest. The time value is the cost of waiting for the interest to accumulate over time. The longer the money stays in the account, the higher the time value.
Overall, time value is an important concept for investors to consider when making investment decisions. It helps them understand the trade-off between waiting for a higher return and the opportunity cost of not investing in other options.