ECONOMICS

Detailed explanation-1: -Higher interest rates result in higher costs of borrowing money. Rising prices causing lower buying power is referred to as an inflation risk. Interest earned on savings may be referred to as the “time value of money."

Detailed explanation-2: -Interest earned on savings may be referred to as the “time value of money.”

Detailed explanation-3: -The time value of money is the degree to which cash available today is worth more than the identical sum at some point in the future, due to its potential for growth. Interest rates are a key quantitative representation of the time value of money.

Detailed explanation-4: -The time value of money (TVM) is the concept that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the interim. The time value of money is a core principle of finance. A sum of money in the hand has greater value than the same sum to be paid in the future.

Detailed explanation-5: -Time value of money is the concept that money today is worth more than money tomorrow. That is because money today can be used, invested, or grown. Therefore, $1 earned today is not the same as $1 earned one year from now because the money earned today can generate interest, unrealized gains, or unrealized losses.