Browse CFA Level 1

Chapter 2: Time Value of Money in Finance

Chapter 2: Time Value of Money in Finance (CFA Level 1): Key concepts, definitions, and exam tips with practical examples. Use it to reinforce intuition and avoid common pitfalls.

In this section

  • Present Value (PV) of Expected Future Cash Flows
    Present Value (PV) of Expected Future Cash Flows (CFA Level 1): Understanding the Time Value of Money, Concept of Present Value, and Single Lump Sum. Key definitions, formulas, and exam tips.
  • Implied Return for Fixed‑Income Instruments
    Implied Return for Fixed‑Income Instruments (CFA Level 1): Understanding Implied Return, Bond Pricing Equation and IRR, and Annualizing Yields and Compounding Conventions. Key definitions, formulas, and exam tips.
  • Required Return and Implied Growth for Equity Instruments
    Required Return and Implied Growth for Equity Instruments (CFA Level 1): Required Return on Equity: Core Concept, Why It Matters, and Linking Required Return to CAPM. Key definitions, formulas, and exam tips.
  • Cash Flow Additivity Principle and No‑Arbitrage
    Cash Flow Additivity Principle and No‑Arbitrage (CFA Level 1): Cash Flow Additivity Principle, Real-World Application: Bond Pricing, and Real-World Application: Equity Valuation. Key definitions, formulas, and exam tips.
  • Forward Rates, Forward Exchange Rates, and Option Values
    Forward Rates, Forward Exchange Rates, and Option Values (CFA Level 1): Understanding Forward Rates, Definition and Intuition, and No-Arbitrage Essence. Key definitions, formulas, and exam tips.

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Chapter 1: Rates and Returns
Chapter 3: Statistical Measures of Asset Returns