The Minimum Rate of Return Used by an Investor to Bring

question 59

Multiple Choice

The minimum rate of return used by an investor to bring future cash flows to their present value is called:

• A)The investment rate.
• B)The prime rate.
• C)The discount rate.
• D)The present rate.

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Definitions:

Compounded Quarterly

This pertains to the calculation of interest on the principal amount and previously accumulated interest four times a year.

Finance Company

A business that specializes in providing loans to consumers and investing in securities.

Conditional Sale

A sales agreement that includes conditions that must be met for the sale to be finalized or for the title of the property to be transferred to the purchaser.

Compounded Annually

Compounded annually refers to the process where interest is added to the principal sum once per year, resulting in the growth of the initial amount over time.