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

More terms

Retail Prices Index (RPI)

An index published each month by the Office for National Statistics, which measures the level of retail prices in the UK. Cash flows on all index-linked gilts are linked to the RPI.

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.

Coupon

Also called a dividend, this is the fixed annual interest paid to gilt holders. It’s usually paid in two equal, semi-annual instalments and expressed as a percentage of the nominal value of the gilt.

Interest Rate

The amount a lender charges for lending your money, or a borrower pays you for borrowing your money.

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.

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

Free Trade

The other free trade. International trade in which countries allow goods to flow across their borders without imposing import or export taxes.

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Bond

Learn what a bond is

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Time Value of Money