Valuation of financial assets requires knowledge of
A) future cash flows.
B) appropriate discount rate.
C) past asset performance.
D) a and b.

Question

Quizplus · Accepted Answer

Valuation of financial assets requires knowledge of both future cash flows and the appropriate discount rate. Past asset performance is not necessarily a requirement for valuation, although it can inform future projections of cash flows. Therefore, the best choice is D, which includes both future cash flows (A) and appropriate discount rate (B).

Valuation of Financial Assets Requires Knowledge of