The Difference Between the Market Value of an Investment and Its

question 208

Multiple Choice

The difference between the market value of an investment and its cost is the:

• A) Net present value.
• B) Internal rate of return.
• C) Payback period.
• D) Profitability index.
• E) Discounted payback period.

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Definitions:

Outstanding Principal

The remaining amount of money borrowed on a loan or bond that has not yet been repaid.

Equity Capital

Funds raised by a company in exchange for a share of ownership in the company.

Venture Capital

Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential.

Factoring Accounts Receivable

A financial transaction where a business sells its accounts receivable to a third party at a discount, in order to obtain immediate cash flow.