The central question for positive financial economics is valuation – what is the value today of a set of future prospective cash flows? The central question for normative financial economics is the appropriate use of financial instruments in a world in which values are set wholly or partially in accord with the principles of positive financial economics.

William Sharpe's February 1992 lecture at Trinity University: in: William Breit, Barry T. Hirsch (2009). Lives of the Laureates: Twenty-three Nobel Economists. p. 172