Financial assets have value because they are claims on the firm's real assets and the cash that those assets will produce.

Question

Quizplus · Accepted Answer

Financial assets such as stocks, bonds or derivatives derive their value from the underlying real assets of a firm and the expected cash flows generated by those assets. Therefore, financial assets represent ownership in the firm's assets and potential future profits, making them valuable to investors.

Financial Assets Have Value Because They Are Claims on the Firm's