A market interest rate for specific type of bond is classified as bond's_____________?
Correct answer: A. Required rate of return
- A. Required rate of return
- B. Required option
- C. Required rate of redemption
- D. Required rate of earning
Explanation
The required rate of return is the market return investors demand for a bond’s risk, maturity, liquidity and other characteristics. It is the benchmark used to value that specific bond’s cash flows.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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