Rational buyers and sellers use their assessment of an asset's risk and return to determine its value. Relative to this concept, which of the following is true?
A) To a buyer the asset's value represents the minimum price that he or she would pay to acquire it.
B) To a seller the asset's value represents the maximum sale price.
C) To a buyer the asset's value represents the maximum price that he or she would pay to acquire it.
D) To a seller the asset's value represents the price at which he acquired the asset.

Question

Quizplus · Accepted Answer

Rational buyers determine the maximum price they are willing to pay for an asset based on their assessment of its risk and return. Therefore, the asset's value represents the maximum price a buyer is willing to pay. Conversely, for a seller, the asset's value represents the minimum price at which they are willing to sell the asset. Therefore, option C is the correct answer. Option A is incorrect because the value is the maximum price a buyer is willing to pay. Option B is incorrect because the value is the minimum price a seller is willing to accept. Option D is incorrect because it does not reflect the current market value of the asset.

Rational Buyers and Sellers Use Their Assessment of an Asset's