The value today of any financial asset equals ________ of all of its future cash flows.
A) the future value
B) the present value
C) the book value
D) the maturity value

Question

Quizplus · Accepted Answer

The present value represents the value today of all of the future cash flows associated with a financial asset. This is because future cash flows are discounted back to the present using an appropriate discount rate, which accounts for the time value of money. The future value represents the value of an asset at some point in the future based on the assumption of a certain interest rate or rate of return. The book value represents the value of an asset on a company's financial statements and may not accurately reflect its true market value. The maturity value represents the final amount that is paid back for some types of financial instruments, such as bonds.

The Value Today of Any Financial Asset Equals ________ of All