A Novation Occurs When There Is a Substitution, by Agreement

question 20

True/False

A novation occurs when there is a substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated.

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Definitions:

Yield-to-Maturity

The total anticipated return on a bond if held until it matures, accounting for its current market price, face value, interest payments, and time to maturity.

Marginal Tax Rate

The rate at which the next dollar of taxable income will be taxed.

WACC

Weighted Average Cost of Capital; a calculation of a company's capital cost that weighs each category of capital proportionately.

Marginal Tax Rate

The marginal tax rate is the rate of tax applied to the next dollar of taxable income, indicating the percentage of tax an individual or corporation pays on an additional dollar of income.