Time Value of Money and Risk

Is a dollar more valuable today or tomorrow? What about a year from now? This introductory-level course covers time value of money (TVM) principles and risk and return. You will review the basic TVM techniques used in evaluating all financial decisions and their cash flow implications. For Risk and Return, you will learn how risk influences investment decisions, and how to calculate risk and rates of return. Further, you will explore the benefits of diversification and the use of the portfolio concept in investing. Learning Outcomes Distinguish between points in time and periods of time as shown by a time line Define compounding and discounting Compute future value or present value for single payment amounts Distinguish between single payments and streams of payments and between uneven streams and annuities Solve for the interest rate or time period for simple present value and future value problems Describe how risk influences investment decisions Calculate risk and rates of return Describe how diversification can limit risk Explain how diversifiable risk can be lowered using a portfolio approach