Explain Some of the Benefits of Buying Bonds

question 53

Essay

Explain some of the benefits of buying bonds.

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Definitions:

Internal Rate

Internal Rate, often referred to as Internal Rate of Return (IRR), is the discount rate that makes the net present value (NPV) of all cash flows from a particular project zero.

Initial Investment

The amount of money spent to start a project, purchase assets, or acquire a business.

Net Cash Inflow

The amount of cash that a company generates from its operational, investment, and financing activities, after accounting for cash outflows.

Payback Period

The time required for an investment to generate cash flows sufficient to recoup the initial investment cost.