An asset's price is the present value of its expected cash flows, discounted at an appropriate rate.

Question

Quizplus · Accepted Answer

This statement is true according to the basic principle of asset valuation in finance. The expected cash flows generated by an asset over time are discounted back to their present value using an appropriate interest or discount rate. This allows investors to compare the value of different assets with varying cash flows and time horizons.

An Asset's Price Is the Present Value of Its Expected