## Step-by-Step Solution ### Step 1: Understand the Question The question asks for the name of the concept that explains why money available today is worth more than the same amount in the future, due to its potential to earn. ### Step 2: Analyze the Options - **a) Risk-Return Tradeoff** This concept deals with the relationship between risk and reward in investing, not the value of money over time. - **b) Time Value of Money** This is the principle that money available now is worth more than the identical sum in the future because of its potential earning capacity. - **c) Diversification** This refers to spreading investments to reduce risk, not the value of money over time. - **d) Financial Leverage** This is about using borrowed money to increase investment returns, not about the value of money at different times. ### Step 3: Choose the Correct Answer The explanation in option **b** matches the definition in the question. --- ## **Final Answer** **b) Time Value of Money** > The concept that money available today is worth more than the same amount in the future due to its earning potential is called the **Time Value of Money**.