The value of any asset-real or financial-is based on _____ and _____.
A) the weighted average cost of investment; the rate of return achieved by the investment firm
B) the cash flow expected to be generated by the asset; the rate of return required by investors
C) the marginal return to investor from the investment asset; the additional cash flow generated by the asset
D) the rate of return achieved by the investment firm; the weighted average cost of investment to the investor
E) the rate of return achieved by the investment firm; the cash flow expected to be generated by the asset

Question

Quizplus · Accepted Answer

The value of any asset, whether it is real or financial, is based on the cash flow expected to be generated by the asset and the rate of return required by investors. Investors will only be interested in buying an asset if it generates enough cash flow to cover the rate of return they require. Therefore, the value of the asset will depend on the amount of cash flow it generates and the rate of return required by investors.

The Value of Any Asset-Real or Financial-Is Based on _____