Which Two of the Following Types of Information Would Most

question 12

Multiple Choice

Which two of the following types of information would most usefully help you to quickly estimate an approximate required rate of return for a bond?

• A) The debt capital
• B) The risk class of the bond you are considering
• C) The annual nominal interest
• D) Rates payable for bonds of different credit ratings

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Definitions:

Fair Value

An estimate of the price at which an asset or liability could be exchanged between willing parties in an arm's length transaction.

Share Capital

Fund raised by a company through the issuance of shares to investors, representing the equity stake of shareholders in the company.

Retained Earnings

Profits generated by a company that are not distributed to shareholders as dividends but are kept as reinvestment in the company or to pay off debt.

Fair Value

What one would receive for selling an asset or pay to transfer a liability in a structured deal among those active in the market at the point of measurement.