Groundlearn / Glossary / Present value
Present value (PV)
Also called PV, discounted value. A CFA term, defined in plain English with the distinction examiners test.
What it means
What a future cash flow is worth today, found by discounting it at a rate that reflects its risk and timing.
The exam angle
Match the rate to the period. A quarterly cash flow discounted at an annual rate is the single most common arithmetic slip in the exam.
Where it appears in the syllabus
- Quantitative MethodsCFA Level I · exam weight 11–14% · Returns and benchmarks, time value, distributions, portfolio maths, regression.
On the calculator
Time value of money questions on the BA II Plus come down to five keys and a few traps (payments per year, BGN mode, the sign of cash flows). Watch the keystrokes video.
Related terms
- AlphaReturn in excess of what the asset’s risk exposures would predict.
- AnnuityA series of equal cash flows at equal intervals.
- Arithmetic meanThe sum of the observations divided by their number.
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- BootstrapResampling the observed data with replacement to estimate the sampling distribution of a statistic, without assuming a…
- Capital market lineThe capital allocation line that runs from the risk-free asset to the market portfolio, the steepest available.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
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