What Economic Concept Is Used as Background for the External

question 17

Multiple Choice

What economic concept is used as background for the external rate of return?

• A)a present worth
• B)a net cash flow
• C)an internal rate of return
• D)a payback period
• E)an opportunity cost

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Definitions:

Zero-Coupon Bond

A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Coupon Rate

A bond's yearly interest payout rate, described as a percentage of its face value.

Coupon Rate

The annual interest rate paid on a bond's face value, indicating the amount of periodic payments to the bondholder.

TIPS Bond

Treasury Inflation-Protected Securities are U.S. government bonds that are indexed to inflation in order to protect investors from the negative effects of rising prices.