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Time Value of Money, inflation, frequecy of compounding

Why does money have a time value?

Does inflation have anything to do with making a dollar today worth more than a dollar tomorrow?

If, as an investor, you had a choice of daily, monthly, or quarterly compounding, which would you choose? Why?

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Does inflation have anything to do with making a dollar today worth more than a dollar tomorrow?

Yes. If prices are rising, a dollar will buy less tomorrow than it will today. Therefore making a dollar today is worth more than a dollar tomorrow.

If, as an investor, you had a choice of daily, monthly, or quarterly compounding, which would you choose? Why?

I would choose daily compounding.
Daily compounding means that whatever interest is earned in a day is added to the principal for calculating interest, the next day.
Monthly compounding means that whatever interest is earned in a ...

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Answers to Questions on Time Value of Money, inflation, frequecy of compounding (daily, monthly, or quarterly compounding).

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