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FIN 120 Exam 2 2025 Questions and Answers Time value of money - ....ANSWER☑️☑️...-the difference in value between a dollar today and dollar in the future; the dollar today is worth more Time zero - ....ANSWER☑️☑️...-the beginning of a transaction; often the current point in time (today) Future value - ....ANSWER☑️☑️...-the value of an investment after it earns interest for one or more periods Compounding - ....ANSWER☑️☑️...-the process by which interest earned on an investment is reinvested, so in future periods interest is earned on the interest as well as the original principal Simple interest - ....ANSWER☑️☑️...-interest earned on the original principal only (not interest on interest) Interest on interest - ....ANSWER☑️☑️...-interest earned on interest from previous periods Compound interest - ....ANSWER☑️☑️...-interest earned on both the original principal and interest previously earned Discounting - ....ANSWER☑️☑️...-the process by which the present value of future cash flows is obtained 1