Consider the claim that rational investors are not willing to pay more for an investment than its present value. Which of the following statements is not part of a sound argument for this claim? Buying above the present value implies an economic loss, i.e. a superior alternative foregone. It is very hard to find an offer below the market price. The present value of an investment is the price at which the same future cash flows could be acquired on the market at the going rate of return on comparable alternative investments. Rational investors compare the alternatives available to them.

Consider the claim that rational investors are not willing to pay more for an investment than its present value. Which of the following statements is not part of a sound argument for this claim? Buying above the present value implies an economic loss, i.e. a superior alternative foregone. It is very hard to find an offer below the market price. The present value of an investment is the price at which the same future cash flows could be acquired on the market at the going rate of return on comparable alternative investments. Rational investors compare the alternatives available to them.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 2PA

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