Which of the following is the best definition of an asset price according to the classical theory?
A)It is equal to future value of expected asset income.
B)It is equal to its future price.
C)It is equal to present value of expected asset income.
D)It is equal to present value of known asset income.

Question

Quizplus · Accepted Answer

According to classical theory, an asset price is equal to the present value of expected asset income. This means that investors will base their decisions on the expected future income the asset will provide, and discount that future income to its present value to determine what they are willing to pay for the asset today.

Which of the Following Is the Best Definition of an Asset