The Time Value of Money (TVM) is a fundamental concept in finance that recognizes that a dollar today is worth more than a dollar in the future due to its earning capacity. Could you explain the principles of the time value of money and its implications on investment decisions? How does the concept of discounting and compounding relate to the TVM theory?The Risk-Reward Tradeoff is a fundamental principle in finance, suggesting that potential return rises with an increase in risk. Could you elaborate on this principle and explain its implications for portfolio construction? How does this tradeoff influence the behavior of individual and institutional investors? The Modern Portfolio Theory (MPT), introduced by Harry Markowitz, revolutionized how investors construct portfolios. It suggests that it's possible to construct an optimal portfolio based on diversification to maximize expected returns for a given level of risk. Can you explain how diversification works according to MPT and how it influences investment decisions? What are the limitations and critiques of MPT?Dividend Discount Models (DDM) are a class of procedures for valuing the price of a stock by using predicted dividends and discounting them back to present value. Could you discuss how the DDM is used in stock valuation and its limitations? How does this relate to the time value of money concept?