To Compute the Price to Pay for a Bond,you Use

question 3

Multiple Choice

To compute the price to pay for a bond,you use

• A) only the present value of $1 concept.
• B) only the present value of an annuity of $1 concept.
• C) both of these.
• D) neither of these.

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Definitions:

Hurdle Rate

Hurdle Rate is the minimum acceptable return on investment or project that a business requires before it considers it viable or proceeds with it.

Accounting Rate of Return

The return on an investment calculated by dividing the average annual profit by the initial investment cost, typically used to assess the profitability of potential investments.

Net Cash Flow

The difference between a company's cash inflows and outflows during a specific period.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the strategy and financial performance of an organization.