CFA Level 1 (2020) Reading 6 – The Time Value of Money

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Reading 6 – The Time Value of Money
– LOS 6a: interpret interest rates as required rates of return, discount rates, or opportunity costs
– LOS 6b: explain an interest rate as the sum of a real risk-free rate and premiums that compensate investors for bearing distinct types of risk
– LOS 6c: calculate and interpret the effective annual rate, given the stated annual interest rate and the frequency of compounding
– LOS 6d: solve time value of money problems for different frequencies of compounding
– LOS 6e: calculate and interpret the future value (FV) and present value (PV) of a single sum of money, an ordinary annuity, an annuity due, a perpetuity (PV only), and a series of unequal cash flows
– LOS 6f: demonstrate the use of a time line in modeling and solving time value of money problems

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