The risk-free rate that is paid as compensation for waiting is referred to as the:
A) Time value of money
B) Real rate of return
C) Total dollar return
D) Average real return
E) Financial reward

Question

Quizplus · Accepted Answer

The time value of money refers to the compensation investors receive for waiting to receive a payment or return. This compensation is typically in the form of interest or dividends and is considered a risk-free rate. Choices B, C, D, and E do not specifically refer to compensation received for waiting and are therefore not the best choice.

The Risk-Free Rate That Is Paid as Compensation for Waiting