Required rate of return in calculating bond's cash flow is also classified as_______?
Correct answer: D. Both A and B
- A. Going rate of return
- B. Yield
- C. Earning rate
- D. Both A and B
Explanation
The required rate used to discount a bond's future cash flows is its yield, commonly called the going or market rate of return. Therefore both terms in options A and B apply.
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