The value of a financial asset is the ________
A) present value of all of the future cash flows that will be received
B) sum of all previous cash flows received
C) future value of just the capital gains but not the dividends
D) present value of just the capital gains but not the dividends
Answer: A
Explanation: A) The value, or price, of a financial asset is the present value of all of the future cash flows that you will receive while you maintain ownership of the asset. If you sell the asset, then your selling price becomes one of the future cash flows you receive.
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