Question

Explain and Analyze the "time Value of money" in recent times. Try to reference the recent pandemic in your analysis.

Answer 1

With Interest rates hitting rock bottom in most economies, time value of money has diminished to a significant extent. In fact many European countries have a negative carry on time value i.e. $1 today would be $0.99 tomorrow! In the US, the 10-year treasury is sub 1% which portrays a falling economic outlook. Emerging countries may have positive yields at this point but falling yields coupled with a depreciating currency is also translating into negative carry.