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Time value of money |
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Time value of moneyThe idea that a dollar today is worth more than a dollar in the future, because the dollar received today can earn interest up until the time the future dollar is received.Time value of money Similar MatchesTrade weight value of the dollarTrade weight value of the dollarThe value of the dollar pegged to, a market basket of selected foreign currencies. The Federal Reserve calculates a trade-weighted value of the dollar based on the weighted-average exchange value of the dollar against the currencies of 10 industrial countries. ValueValueThe worth or desirability of something expressed as an amount of money. Value investingValue investingValue investing is something of a misnomer in many ways as no-one would knowingly buy shares in a company unless they thought that the shares were good value. However, in investment circles it has come to mean the purchase of shares that look cheap according to particular criteria. Historically, this has meant the purchase of shares in companies which have low price earnings ratios (P/Es), a high level of asset backing, or high dividend yields, or a mixture of all three. As such it is contrasted with growth investing, where the investor focuses only on the potential for future earnings growth and is prepared to pay much high P/E multiple.So the heart of value investing lies in comparing two figures:Current Market ValueMultiply the number of ordinary shares in issue by the current price of each share to produce the market capitalisation. You can look up the market capitalisation of a quoted company in the financial pages of most newspapers, and on many financial websites.Intrinsic Value of the CompanyThere is no single way of establishing what the value of a company should be. Instead, value investors use a number of different valuation techniques, based on asset values, dividends, earnings, cash flows and other financial criteria.When a value investor identifies a discrepancy between the Current Market Value and the Intrinsic Value (according to the criteria he chooses), and the first is lower than the second, he invests. When the gap between them closes, or reverses, he sells, and takes his profit. Hidden valuesHidden valuesIn the US, assets owned by a company but undervalued on the balance sheet and accordingly not reflected in the share price. Similar to hidden reserves in the UK. Price to book valuePrice to book valueA financial ratio defined as: current share price divided by the net asset value per share. Put another way, the market capitalisation of the company divided by its total net assets. Further SuggestionsLong market valueValue additivity principal Value added break up value Intrinsic value of an option economic value added Under-valued currency Present Value Index (PVI) valued policy Price value of a basis point (PVBP) Market Value transfer value Present value of growth opportunities Parity value intrinsic value Written down value Extraordinary positive value Value at risk model (VaR) Original face value Base market value Value quota Value stocks Intrinsic value Market value Straight value |
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