Helpful Info Word Scramble
|
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Question | Answer |
Explain IRR | The interest rate that sets the net present value of the cash flows equal to zero. |
Retention Rate | The fraction of a firm's current earning that the firm retains. 1-dividend rate. % of earnings that a firm chooses to grow and not give to its shareholders via dividends. Div rate=1-retention. |
Treasury Yield Curve | Risk-free rate of return for treasury bonds. Diminishing returns as time goes on. |
Bond Price/Yield Relationship | The discounting of future cash flows. A higher yield means that the future cash flows discount at a higher rate and it yields a lower present value (price) to get the same face value. |
NPV>0 | Go ahead with purchase bc it's adding value. The NPV>0 means the project is earning more than the rate of 17%. 17% is the measure of the opportunity cost of investing in other projects of similar risk. |
Dividend Yield | Dividend payment/share price |
Identifying Discount/Premium | We know bond will sell at a discount bc it has a coupon rate of 7% when the market requires 8%. |
Created by:
Elisahbeth
Popular Finance sets