The time value of money concept is a topic that finance students probably studied in introductory financial management courses. However, an understanding of its use in the valuation of financial instruments created, traded, and held by individual investors and financial institutions is critical. Therefore, in this chapter, we review and provide a reference guide to the general relationships between interest rates and security valuation. This material can be included or dropped from the chapter reading, depending on the need for review of the material, without harming the continuity of the chapter. In Chapter 3, we use these general relationships to determine the values of specific securities (e.g., equities and bonds).