Answer to Question #78103 in Finance for Cloud Stanford

Question

Our Finance teacher wants us to explain the meaning each of the following:
1. More value is preferred to less value
2. The sooner cash is received the more valuable it is
3. Less risky assets are more valuable than riskier assets

Answer 1

1. More value is preferred to less value, because we can compare assets using their value first of all.
2. The sooner cash is received the more valuable it is, because inflation and time needed to use cash make it less valuable.
3. Less risky assets are more valuable than riskier assets, because the lower risk, the lower probability of decrease in its price or even loss of the asset.