We’ll cover the Time Value Of Money reading of the Quantitative Methods topic within the CFA Level 1 syllabus. The time value of money forms the basis for cash flow and security valuation. The purpose of this video is to provide a summary of the main formulae you need to know and to practise using them through exercises. We’ll start by introducing the main types of formulae and we’ll then go through 7 exercises to consolidate your understanding of these. Content covered includes: calculating the future value - both discrete and continuous compounding, the effective annual rate, the future and present value of an annuity, the growth rate of an investment and the present value of a perpetuity.
Disclaimer: This video will not provide you with an all-encompassing overview of this CFA Level 1 reading and therefore, should not be relied on exclusively for your revision.
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[email protected]Overview: (0:00)
Main formulae: (0:45)
Future value - discrete compounding: (2:07)
Future value - continuous compounding: (3:40)
Effective annual rate: (4:35)
Future value of an annuity: (6:26)
Present value of an annuity: (9:07)
Calculate a growth rate: (10:27)
Present value of a perpetuity: (11:38)