The value of a financial asset is the ________.
A)present value of all of the future cash flows that will be received
B)sum of all previous cash flows received
C)future value of just the capital gains but not the dividends
D)present value of just the capital gains but not the dividends

Question

Quizplus · Accepted Answer

The value of a financial asset is determined by calculating the present value of all future cash flows that the asset is expected to generate. This includes both capital gains and dividends. The sum of previous cash flows received does not necessarily reflect the current value of the asset. The future value of just capital gains or present value of just capital gains but not dividends does not fully capture the true value of the asset.

The Value of a Financial Asset Is the ________