Which one of the following is generally considered to be the best form of analysis if you have to select a single method to analyze a variety of investment opportunities?
A. Payback
B. Profitability index
C. Accounting rate of return
D. Internal rate of return
E. Net present value
Ans: A. Payback
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Which of the following statements about the relationship between yield to maturity and bond prices is FALSE?
A) When the yield to maturity and coupon rate are the same, the bond is called a par value bond. B) A bond selling at a premium means that the coupon rate is greater than the yield to maturity. C) When interest rates go up, bond prices go up. D) A bond selling at a discount means that the coupon rate is less than the yield to maturity.
Your firm is faced with paying a variable rate debt obligation with the expectation that interest rates are likely to go up. Identify two strategies using interest rate futures and interest rate swaps that could reduce the risk to the firm
What will be an ideal response?