Each future cash flow is converted to its value today by multiplying it by a discount factor, and the results are added up. When interest rates rise, discount factors fall, so the present value of fixed cash flows goes down.
Present value
- Japanese
- 現在価値
- Also known as
- PV
- Last reviewed
- September 23, 2026
This is a draft, shown for review before publication.
Present value is the value today of money to be received or paid in the future.
Related terms
Explained in detail
Pages that use this term
- Compounding and Discounting
- Zero Rates and Forward Rates
- Bootstrapping a Yield Curve
- The Multi-Curve Framework
- Curve Interpolation
- Market Size Statistics (BIS Surveys)
- How Swaps Work
- Put-Call Parity
- Overview of Exotic Options
- Digital Options
- Forward Rate Agreements (FRA)
- Valuing an Interest Rate Swap
- Swaptions
- Bermudan Swaptions
- Callable Swaps
- Snowballs
- Dividend Swaps and Futures
- Pricing a CDS
- First-to-Default Baskets
- Synthetic CDOs and Tranches
- Longevity Swaps
- Convertible Bonds (CB)
- PRDC Notes
- The Black-Scholes Model
- Implied Volatility
- CVA and DVA
- Finite Difference Methods
- Sensitivities: DV01, Vega and Key Rate Sensitivities
- Exposure Profiles by Product
- Handling Margin Calls
- Capital Valuation Adjustment (KVA)
- Early Termination
- Regulatory Reporting
- Fair Value Measurement: IFRS 13, ASC 820 and the Fair Value Hierarchy
- CVA and DVA in Accounting
- Portfolio Reconciliation