Your favorite uncle learned that you have completed a course in finance. Uncle Bob has been investing in stocks for years through his company pension plan. He has also bought some stock outside the company plan. Bob does not think he is saving enough for his retirement and wants your help him choose where he should put his extra funds. He wants to get together with you several times and during the first session he wants to talk about bonds.

1. Explain how any financial asset is valued. Why is this method reasonable?