1. What is the difference between a financial asset and tangible asset?
A financial asset is an asset whose value arises not from its physical embodiment but from a contractual relationship: stocks, bonds, bank deposits, currency, etc... whereas a tangible asset has a physical existence, such as cash, equipment, and real estate.
2. What is the basic principle in determining the value of financial asset?
The basic principle to determine the price or value of a financial asset is the evaluation of the present value of all expected future cash flows.
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