Assuming everything else equal, one of the concepts to consider to make sound financial decisions is that _____.
A) the riskier assets always have lower market value
B) the riskier assets are more valuable than (preferred to) less risky assets
C) the sooner cash is received, the more valuable it is
D) investors always prefer short-term, low value, and high-risk assets
E) investors always achieve higher returns from less risky assets

Question

Quizplus · Accepted Answer

The concept of time value of money states that the sooner cash is received, the more valuable it is, as it can be invested and earn a return. This is why it's important to consider the time horizon when making financial decisions and to prioritize cash flows that come in earlier rather than later. Options A, B, D, and E do not accurately reflect the relationship between risk and value or the importance of timing in financial decision making.

Assuming Everything Else Equal, One of the Concepts to Consider