The special provisions that can have adverse or beneficial effects and are reflected in interest rates do not include _____________?
Correct answer: D. inflation premiumFinance
- A. tax-ability
- B. covert ability
- C. call ability
- D. inflation premiumFinance
Explanation
Taxability, convertibility, and callability are special bond provisions that can affect the required interest rate. An inflation premium compensates for expected loss of purchasing power, so it is a risk premium rather than a special provision.
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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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