Question

What will happen if the current asset price is greater than the present value of income? Question 2 options: Buyers will bid the asset's price down until it equals the discount rate. Sellers will lower the asset's price until it equals the present value of income. Sellers will raise the asset's price until it equals the present value of income. Buyers will bid the asset's price down until it equals the present value of income.

Answer 1

Answer:

The answer is:  Buyers will bid the asset's price down until it equals the present value of income.

Explanation:

As the current asset price is greater than the present value of income, it is overpriced.

So, seller is much willing to sell at this price, however, buyers does not want to buy asset at this price as they only want to purchase it at the price equals to the present value of its income.

So, Buyers will bid the asset's price down until it equals the present value of income which is the level they are willing to buy and also at which the seller is willing to sell also.