The market value of any financial asset may be estimated by determining future cash flows and then discounting them back to the present.

Question

Quizplus · Accepted Answer

This statement is true. The market value of any financial asset is derived from the expected future cash flows that the asset is expected to generate, and these cash flows are then discounted back to the present using an appropriate discount rate. This is a fundamental principle of asset valuation that applies to a wide range of financial instruments, including stocks, bonds, and real estate.

The Market Value of Any Financial Asset May Be Estimated