Free Cash Flow Is the Measure of Operating Cash Flow

question 18

True/False

Free cash flow is the measure of operating cash flow available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity and dividends.

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Definitions:

Reinvestment Rate Risk

The risk that the returns from reinvesting cash flows will be lower than expected due to changes in interest rate.

Market Interest Rate

The prevailing rate of interest available in the marketplace for securities of similar risk and maturity.

Coupon Rate

The coupon rate represents the yearly interest percentage that is paid out on a bond, depicted as a proportion of its nominal value.

Premium

The amount by which the price of a financial instrument or asset exceeds its face value or principal amount, often related to bonds or insurance products.