HPE0-P26 · Question #72
Is this statement correct? Solution: ROI is a principle that states money today is worth more than the identical sum in the future.
The correct answer is B. No. B is correct because the statement misidentifies the concept: the principle that money today is worth more than the same sum in the future is called the Time Value of Money (TVM), not ROI (Return on Investment). Why A is wrong: ROI is a performance metric, not a time-value…
Question
Is this statement correct? Solution: ROI is a principle that states money today is worth more than the identical sum in the future.
Options
- AYes
- BNo
How the community answered
(29 responses)- A10% (3)
- B90% (26)
Explanation
B is correct because the statement misidentifies the concept: the principle that money today is worth more than the same sum in the future is called the Time Value of Money (TVM), not ROI (Return on Investment).
Why A is wrong: ROI is a performance metric, not a time-value principle. It measures the efficiency or profitability of an investment, calculated as (Net Gain / Cost) × 100. It says nothing about the relative worth of money across time.
Memory tip: Think of the acronym - ROI = Results Of Investing (a measurement), while TVM = Time Values Money (a principle). If an exam question talks about when money is worth more, that's TVM; if it talks about how much a return an investment generated, that's ROI.
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