An asset would be usable as a medium of exchange for all of the following reasons except: A. the asset should be a commodity that has intrinsic value. B. the asset must be generally accepted by most people. C. the asset should be durable and not lose value due to spoilage. D. the asset should be divisible since goods are valued at different amounts.

Question

Braedon Page

Business

19 July, 14:40

An asset would be usable as a medium of exchange for all of the following reasons except: A. the asset should be a commodity that has intrinsic value. B. the asset must be generally accepted by most people. C. the asset should be durable and not lose value due to spoilage. D. the asset should be divisible since goods are valued at different amounts.

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Kinley · Answer 1

A. the asset should be a commodity that has intrinsic value.

Explanation:

The intrinsic value is not the current trading market value. The intrinsic value is obtained by certain formulae. It is calculated by using assumptions. The intrinsic value is the difference between the current value and the asset's own recognized value in terms of its benefits or costs.

For example the intrinsic value of the stock would be calculated using the perceptions of its qualitative and quantitative measures such as the growth rate, cost of equity, next year's expected accrual dividend etc.

The asset is not sold or purchased using intrinsic value.