The Price of a Financial Asset Should Be Equal to

question 217

Multiple Choice

The price of a financial asset should be equal to

• A)the face value of the asset.
• B)the present value of the sum of the coupon payments and the interest rate.
• C)the face value of the asset divided by the interest rate.
• D)the present value of payments to be received from owning that asset.

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Definitions:

Shareholder Theory

The theory that a corporation primarily has a duty to maximize shareholder value and profit, as advocated by Milton Friedman.

Firm's Purpose

A firm's purpose is its core reason for existence, encompassing its mission, values, and goals, which guides its strategies and operations.

Stakeholders

Individuals or groups that have an interest in the performance and activities of a company, including employees, customers, suppliers, and investors.

Strategic Goal

Refers to a long-term aim that guides decision-making and strategy formulation in an organization.