What Is a Time Deposit? A time deposit is an interest-bearing bank account that has a pre-set date of maturity. A certificate of deposit (CD) is the best-known example. The money must remain in the account for the fixed term in order to earn the stated interest rate. Time deposits generally pay a slightly higher
What Is a Time Draft? A time draft is a form of payment that is guaranteed by an issuing bank but is not payable in full until a specified amount of time after it is received and accepted. Many international trade transactions use drafts as a way to indicate the terms of payment for shipped
What Is Timeliness? Timeliness is a stock analysis rating system that ranks stocks according to their predicted price performance. It is a proprietary measure from the financial analysis and publishing firm Value Line (VALU) that ranks stocks based on their anticipated performance over the following six to twelve months. Timeliness assigns a rank of 1
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
