Which Type of Bond Most Likely Earns Interest on an Implied

question 11

Multiple Choice

Which type of bond most likely earns interest on an implied basis?

• A) Floater
• B) Conventional bond
• C) Pure discount bond

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Definitions:

Salvage Value

The anticipated remaining value of an asset at the conclusion of its operational life.

Payback Period

The length of time required to recover the initial investment in a project, without accounting for the time value of money.

Gross Revenues

The total sales revenue of a company without any deductions.

Internal Rate

Often refers to the internal rate of return (IRR), a metric used in capital budgeting to estimate the profitability of potential investments.