Define payback period investment rules

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Reference no: EM132446661

Question a)

i) If interest rates rise after a bond issue, what will happen to the bond's price and yield to maturity (YTM)? Does the time to maturity affect the extent to which interest rate changes affect the bond's price? (use an example to answer this question.)

ii)) Why does the value of a share of stock depend on dividends?

Question b) Define each of the following investment rules and discuss any potential shortcomings of each. In your definition, state the criterion for accepting or rejecting independent projects under each rule:

Payback period
Internal rate of return
Profitability index
Net present value

  • Please discuss the questions in complete paragraphs.
  • Please Provide all reference

Reference no: EM132446661

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