Reasons for time preference of money, Financial Management

Assignment Help:

Q. Reasons for Time Preference of Money?

1) Future Uncertainties: One of the reasons for preference for current money is that there is a certainty about it whereas the future money has an uncertainty. There may be an apprehension that the other party (the creditor) may become insolvent or untraceable.

2) Preference' for Consumption: Most people have subjective preference for present consumption over future consumption of goods and services either because of the urgency of their present wants or because of the risk of not being in a position to enjoy future consumption that may be caused by illness or death, or because of inflation. As money is the means by which individuals acquire most goods and services, they may prefer to have money now.

3) Investment Opportunities: Most individuals prefer present cash to future cash because of the available investment opportunities to which they can put present cash to earn additional cash.


Related Discussions:- Reasons for time preference of money

Describe the dividend yield method, Q. Describe the Dividend Yield Method? ...

Q. Describe the Dividend Yield Method? Dividend Yield Method: - This process is based on the assumption that when an investor invests in the equity shares of a company he expec

Evaluate the initial exchange of cash, Consider a currency swap in which th...

Consider a currency swap in which the domestic party pays a fixed rate in foreign currency, the UK pounds sterling, and the counterparty pays a fixed rate in US Dollars. The not

International bonds, International bonds are divided into two c...

International bonds are divided into two categories namely, foreign bonds and euro bonds. Foreign bonds are issued by a borrowing company in another

Case study - credit-linked notes, Case Study - Credit-Linked Notes Cred...

Case Study - Credit-Linked Notes Credit linked notes are assets issued by financial institutions which have exposure to the credit risk of a reference Issuer . These notes pay

Calculation of variances, a) Distinguish among standard costing and budgeta...

a) Distinguish among standard costing and budgetary control.  (b)"Calculation of variances in standard costing is not an end in itself, but a means  to an end" Brief discussion

Calculate roe when roe may be calculated more simply, Why would an analyst ...

Why would an analyst use the Modified Du Pont system to calculate ROE when ROE may be calculated more simply? Explain. In fact, an analyst wouldn't use the Modified Du Pont eq

Mathematical property of median, Mathematical Property The sum of the d...

Mathematical Property The sum of the deviations of the items from median, ignoring signs, is the least. For example, the median of 6, 10, 14, 18 and 22 is 14. The deviations fr

Defien contractual savings institutions, Contractual savings institutions ...

Contractual savings institutions Contractual savings institutions obtain funds at periodic intervals on a contractual basis. The industry is classified into two main groups ins

Discuss about the materiality, Discuss about the Materiality An item ca...

Discuss about the Materiality An item can be considered material if its omission would reasonably influence the decisions of an addressee of report, a misstatement is material

Define u.s. dollar and the canadian dollar, Under what circumstance would t...

Under what circumstance would the U.S. dollar and the Canadian dollar be said to have achieved purchasing power parity? The U.S. dollar and the Canadian dollar would be referred

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd