The prices that investors pay for securities are determined by:

Question

Quizplus · Accepted Answer

The prices that investors pay for securities are primarily determined by the cash flows they expect to receive from owning them. Other factors such as profitability and stability of profits also contribute to the determination of prices, but ultimately it is the expected cash flows that drive prices. Factors such as collateral of the firm's liabilities and the opinions of financial advisors do not have a direct impact on security prices.

The Prices That Investors Pay for Securities Are Determined By