The Following Are All Important Items to Look Out for When

question 48

Multiple Choice

The following are all important items to look out for when you perform capital budgeting for a company except

• A) be aware of allocated overhead costs.
• B) include all indirect effects.
• C) include sunk costs.
• D) include opportunity costs.

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Definitions:

Reinvestment Risk

The risk of having to reinvest income or principal at a lower interest rate in a fluctuating interest rate environment.

Default Risk

The possibility that a borrower will fail to pay back a loan or meet contractual obligations.

Government of Canada Bond

A debt security issued by the Canadian government to support government spending.

Maturity Date

The specified date on which the final payment of a loan, bond, or other financial instrument must be paid in full.