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Loan value |
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Loan valueThe maximum percentage of the value of securities that a broker can lend to a margin account customer, as dictated by the Federal Reserve Board in Regulation T.Loan value Similar MatchesTime valueTime valueThe time value of money is the simple concept that money in your hand now is worth more than money in a year's time, because you can earn a return on money by lending it out. If, for instance, you are able to earn 10% interest on money, and you are offered £100 now or £109 in a year's time, you should take the £100 now because in a year's time you can have £110 (£100 + £10 interest). If you are offered £111 in a year's time, you should take that option.In valuing companies, stock analysts use the concept of the time value of money to discount back the estimated future earnings of a company to their present value. This is meant to enable comparison of different companies whose future earnings may come at different times. By discounting, the value of those earnings is assessed on their present value, so like can be compared with like.In options, the time value is the amount by which an option's price exceeds its intrinsic value. Suppose the shares of XYZ are trading at 60p. There is an option to buy XYZ's shares before 1st December at 55p, and the price of that option is 8p.The intrinsic value of this option is the difference between the exercise price (55p) and the share price (60p) = 5pThe time value is the difference between the option price (8p) and the intrinsic value (5p) = 3pOptions have a time value to reflect the fact that, in the time until expiry (1st December) the option holder has the opportunity to make profits if the underlying share price moves in his favour. As that expiry date approaches, the time value will decrease until it reaches zero. 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. Intrinsic value of an optionIntrinsic value of an optionThe amount by which an option is in the money. An option that is not in the money has no intrinsic value. Straight valueStraight valueAlso called investment value, the value of a convertible security without the conversion option. Over-valued currencyOver-valued currencyThe situation of a currency whose value on the exchange market is higher than is believed to be sustainable. This may be due to a pegged or managed rate that is above the market-clearing rate, or, under a floating rate, it may be due to speculative capital inflows. Contrasts with under-valued currency. Further Suggestionsintrinsic valueTransaction value Ex ante value cash surrender value fair value Net present value of growth opportunities Face value Present Value Index (PVI) Under-valued currency Normal value Value marginal product Time value Hidden values Net adjusted present value Future value Value quota Par value Value stock fund Value added tax No par value stock Stated value Value at risk model (VaR) beta value Present value Expected value of perfect information |
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