The Present Value of a Financial Asset Is

question 41

Multiple Choice

The present value of a financial asset is

• A)the most someone would be willing to pay upon maturity of the asset.
• B)the most someone would be willing to pay today for the asset.
• C)equivalent to the face value of the asset.
• D)the amount someone would pay in the future to have the asset today.
• E)the amount someone would pay in the future for the current stream of payments from the asset.

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Definitions:

Indifference Curves

Graphical representations in economics that show different bundles of goods between which a consumer is indifferent, meaning that the consumer has no preference for one bundle over another.

Concave

A shape or curve that is curved inward, resembling the interior of a circle or sphere, often used in the context of economic functions.

Tangency

A point at which two lines or curves meet without intersecting, often used in economics to find points of optimization, such as in budget constraints or indifference curves.

Budget Line

A visual diagram showing every potential mix of two products that can be bought given specific income levels and price points.