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D076 - Investment Decisions 2024 latest update(graded A+).
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D076 - Investment Decisions 2024 latest update(graded A+).
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D076 - InvestmentDecisions 2024 latest
update(graded A+)
How does an analyst use the hurdle rate? - answer
It is used to compare with the IRR to determine
whether a project should be accepted.
What would profitability index (PI) be useful for? -
answer Determining whether a firm should invest
in projects with different initial outlays
An investor really cares about having voting rights
in a firm.
Which type of financial security should this
investor purchase? - answer Common stock
The lowest rate of return is required by which type
of investor or lender? - answer Bank
Which type of bond provides the lowest rate of
return to the investor? - answer AA-rated bonds
, NPV - answer The sum (or net) of the present
values of all of the project's expected cash inflows
and outflows.
IRR - answer The rate of return that a firm earns on
its capital projects.
PI - answer The profitability index (PI) helps in the
interpretation of NPV.
Ratio of payoff to investment for a proposed
project.
Bonds - answer How corporations raise debt
capital.
A firm that issues bonds is borrowing money
directly from investors on the market. When you
buy a bond, you as an investor are loaning money
to the firm that issued the bond.
Fixed income securities - answer Another name for
bonds; a financial security in which the borrower
pays a fixed interest payment to investors each
year.
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