Since Investors Prefer to Have Money Now Rather Than Later

Multiple Choice

Since investors prefer to have money now rather than later, money received next week, instead of today, is not worth as much to those receiving it, assuming the magnitude of the cash flow in each period is the same. Therefore an adjustment to the prospective cash flows is required. This process is referred to as:

A) compounding
B) discounting
C) amortizing
D) hedging