The present value model of investment states that an asset's current price should be equal to the:

Question

Quizplus · Accepted Answer

The present value model of investment is based on the idea that an asset's current price should be equal to the sum of the present values of all of its future payments or earnings. This means that the price of an asset should reflect the value of all the cash flows it is expected to generate in the future, discounted back to their present value. The other choices listed do not accurately reflect the present value model.

The Present Value Model of Investment States That an Asset's