What Is Meant by Net Present Value

question 65

Multiple Choice

What is meant by net present value?

• A) It is the discounted value of a future cash ?ow.
• B) It is the amount of money supply in an economy.
• C) It is the amount that money supply changes after a change in the equilibrium interest rate.
• D) It is the level of planned investment by a ?rm.

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Definitions:

Equity Securities

Financial instruments that represent ownership in a company, such as stocks, entitling holders to dividends and capital gains.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Debt Securities

Financial instruments representing money borrowed that must be repaid, often with interest, including bonds, bills, and notes.

Fair Value

The estimated price at which an asset can be bought or sold in a current transaction between willing parties.