Which of the Following Summarizes the Classical Theory of Asset

question 48

Multiple Choice

Which of the following summarizes the classical theory of asset prices? I. An asset price equals the present value of expected income from the asset. II. The interest rate in the present value formula is the safe interest rate.
III) The risk premium is zero.

• A)I only II
• B)only III
• C)only
• D)II and III

---

Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period for more accurate financial statements.

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.

Sales

The total amount charged customers for merchandise sold, including cash sales and sales on account.

Interest-bearing Note

An interest-bearing note is a debt instrument in which the borrower agrees to pay the lender interest in addition to repaying the principal amount borrowed.