The Present Value of a Bond Is Determined by the

question 50

Multiple Choice

The present value of a bond is determined by the

• A)face value and the date of maturity.
• B)rate of inflation.
• C)market rate of interest only.
• D)market rate of interest,the date of maturity,and the face value.
• E)marginal rate of income tax.

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Definitions:

NPV Calculations

A method used to evaluate the profitability of an investment by calculating the difference between the present values of cash inflows and outflows over a period of time.

Cash Flow Projections

Estimates of the amount of money expected to flow in and out of a business over a certain period.

Discount Rate

This is the rate used during discounted cash flow analysis for evaluating the present value of cash flows anticipated in the future.

Financial Break-even Point

It is the level of revenue necessary to cover a company’s fixed and variable costs, without generating profit or loss.