Which of the following statements is correct? Assume everything else equal.
A)Riskier assets always have higher market values.
B)Riskier assets are more valuable than (preferred to) less risky assets.
C)The sooner cash is received, the more valuable it is.
D)Investors generally prefer short-term, high-risk assets investments.
E)Investors generally receive higher returns on investments with low risk than investments with high risk.

Question

Which of the following statements is correct? Assume everything else equal. 
A)Riskier assets always have higher market values.
B)Riskier assets are more valuable than (preferred to) less risky assets.
C)The sooner cash is received, the more valuable it is.
D)Investors generally prefer short-term, high-risk assets investments.
E)Investors generally receive higher returns on investments with low risk than investments with high risk.

Quizplus · Accepted Answer

The time value of money principle states that a dollar received in the present is worth more than a dollar received in the future, assuming everything else is equal. This means that the sooner cash is received, the more valuable it is. Options A and B are incorrect because riskier assets may have higher or lower market values depending on the market conditions and investors' preferences. Option D is incorrect because most investors prefer a mix of short-term and long-term investments with varying levels of risk. Option E is incorrect because investments with higher risk usually offer higher returns to compensate investors for taking on additional risk.

Which of the Following Statements Is Correct? Assume Everything Else