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:

Corporate Dividend Preference

A feature of preferred stock entitling holders to receive dividends before any dividends can be distributed to common stockholders.

Payout Ratio

The percentage of earnings paid to stockholders in dividends.

Tax Implications

The effects that various financial decisions and actions have on the amount of tax an individual or business owes to the government.

Proportionate Ownership

The share of ownership in a company or property based on the percentage of shares or units held relative to the total outstanding.