Match Each Definition That Follows with the Term (A-F) It

question 185

Multiple Choice

Match each definition that follows with the term (a-f) it defines.
-The process by which management allocates funds among various capital investment proposals

• A)Capital rationing
• B)Annuity
• C)Capital investment analysis
• D)Internal rate of return method
• E)Payback period
• F)Accounting rate of return

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Definitions:

Zero Coupon Bond

A debt security that doesn't pay periodic interest but is traded at a deep discount, providing profit at maturity when the bond is redeemed for its full face value.

Current Yield

The annual income (interest or dividends) divided by the current price of the security.

Coupon Bond

A type of bond that pays the holder periodic interest payments at a fixed rate (the coupon rate) before maturing, at which point the principal or face value is repaid.

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all interest payments and the principal repayment.