What is the 'time value of money'? Definition & meaning

More terms

Conventional gilts

Gilts where the dividends and principal repayments are fixed in nominal terms. This is as opposed to an index-linked gilt where the dividends and principal repayments are related to movements in the Retail Prices Index (RPI).

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

Zero coupon bonds

What is a zero coupon bond?

UK Treasury bill

A debt instrument issued by the UK government with a maturity of less than one year.

Geometric Mean Return

A way of calculating compound returns on an investment or savings over a set period of time.

Value Investing

The art of buying shares which trade below their value, according to the analysis of the value investor.

Maturity date

The date on which a gilt is redeemed and the gilt holder receives the repayment of the nominal amount and final dividend or coupon payment.

Stock Exchange

A physical/digital place where stockbrokers and traders can buy and sell securities.

DMO

The United Kingdom Debt Management Office. It’s an executive agency responsible for managing the government’s debt and cash needs, primarily through issuing gilts and Treasury bills.

Time Value of Money