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The Correct Price for a Financial Asset Can Be Expressed P=CF1(1+r)1+CF2(1+r)2+CF3(1+r)3+CFN(1+r)N where P=\frac{C F_{1}}{(1+r)^{1}}+\frac{C F_{2}}{(1+r)^{2}}+\frac{C F_{3}}{(1+r)^{3}}+\frac{C F_{N}}{(1+r)^{N}} \text { where }

Question 11

Multiple Choice

The correct price for a financial asset can be expressed as follows: P=CF1(1+r) 1+CF2(1+r) 2+CF3(1+r) 3+CFN(1+r) N where P=\frac{C F_{1}}{(1+r) ^{1}}+\frac{C F_{2}}{(1+r) ^{2}}+\frac{C F_{3}}{(1+r) ^{3}}+\frac{C F_{N}}{(1+r) ^{N}} \text { where } _________


A) P = the price of the cash flow
B) CFt = the financial asset in year t (t = 1, … ,N)
C) N = the maturity of the financial asset
D) r = the appropriate cash rate

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