Essential Notes for TVM in Finance (CFA Level I)

Time Value of Money in Fixed Income

Ever wondered how investors make money from bonds without breaking a sweat? Learn the art of applying the time value of money to fixed income investments, ensuring you never overlook the power of interest rates and time on your returns.

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Time Value of Money in Equity Instruments

Grasp the essentials of valuing equity instruments through the lens of the time value of money, from mastering dividend-based valuation models to decoding implied growth rates and justified P/E ratios. Get ready to analyze stocks like a pro!

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Cash Flow Additivity

The Cash Flow Additivity principle is crucial in finance, highlighting how the present value of a security is the sum of the present values of all future cash flows, each discounted by the security’s required return. It underpins the valuation of financial instruments and market equilibrium, demonstrating how arbitrage opportunities are short-lived in efficient markets.

► Dive deeper into how this principle applies to forward interest rates and exchange rates here.