One Way to Use the Payback Period Is to Set

question 36

True/False

One way to use the payback period is to set a maximum payback period for all projects and to reject any project that exceeds this level.

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Definitions:

Bond Issue

The process by which a corporation or government raises capital by selling bonds to investors, which are debt securities obligating the issuer to pay interest at predetermined intervals and to repay the principal at maturity.

Registrar

is an organization or entity responsible for keeping records of bondholders and shareholders for companies and financial institutions.

Default Risk Premium

The portion of a nominal interest rate or bond yield that represents compensation for the possibility of default.

Inflation Premium

The extra yield on an investment that investors require as compensation for the loss of purchasing power due to inflation.