The value of future payments is affected by
A) The level of dividends.
B) Capital gains.
C) The par value.
D) The probability of nonpayment.

Question

Quizplus · Accepted Answer

The probability of nonpayment affects the value of future payments because if there is a high risk that the issuer will not be able to make the payments, then the future payments are worth less to investors. The other choices, including the level of dividends, capital gains, and par value, may affect the current price of a security, but they do not directly impact the value of future payments.

The Value of Future Payments Is Affected by