What Is the Time-Preference Theory of Interest? The time preference theory of interest, also known as the agio theory of interest or the Austrian theory of interest, explains interest rates in terms of people’s preference to spend in the present over the future. This theory was developed by economist Irving Fisher in “The Theory of
What Is a Timeshare? A timeshare is a shared ownership model of vacation real estate in which multiple purchasers own allotments of usage, typically in one-week increments, in the same property. The timeshare model can be applied to many different types of properties, such as vacation resorts, condominiums, apartments, and campgrounds. Time-sharing is a form
What Is the Times-Revenue Method? The times-revenue method is a valuation method used to determine the maximum value of a company. The times-revenue method uses a multiple of current revenues to determine the “ceiling” (or maximum value) for a particular business. Depending on the industry and the local business and economic environment, the multiple might
What Is Time Value? Time value refers to the portion of an option’s premium that is attributable to the amount of time remaining until the expiration of the option contract. The premium of any option consists of two components: its intrinsic value and its extrinsic value. Time value is a component of an option’s extrinsic
What Is the Time Value of Money (TVM)? The time value of money (TVM) is the concept that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim. The time value of money is a core principle of finance.
What is Time-Weighted Rate of Return – TWR? The time-weighted rate of return (TWR) is a measure of the compound rate of growth in a portfolio. The TWR measure is often used to compare the returns of investment managers because it eliminates the distorting effects on growth rates created by inflows and outflows of money. The
What Is Timing Risk? Timing risk is the speculation that an investor enters into when trying to buy or sell a stock based on future price predictions. Timing risk explains the potential for missing out on beneficial movements in price due to an error in timing. This could cause harm to the value of an investor’s
What Is TINA? TINA is an acronym for “there is no alternative.” It is often used by investors to justify a lackluster performance by stocks on the grounds that other asset classes offer even worse returns. Acceptance of TINA can lead to the “TINA Effect,” a phenomenon in which stocks rise only because investors see
What Is Tipping? Tipping is the act of providing material non-public information about a publicly traded company or a security to a person who is not authorized to have the information with the intent to gain some sort of benefit. As long as the information is accurate, tipping can produce huge profits for an investor
What Are Treasury Inflation-Protected Securities (TIPS)? Treasury Inflation-Protected Securities (TIPS) are a type of Treasury security issued by the U.S. government. TIPS are indexed to inflation to protect investors from a decline in the purchasing power of their money. As inflation rises, rather than their yield increasing, TIPS instead adjust in price (principal amount) to
