1. Which one of the following risk premiums compensates for the possibility of nonpayment by the bond issuer?
A. default risk
B. taxability
C. liquidity
D. inflation
E. interest rate risk
2. A project has an initial cost of $27,400 and a market value of $32,600. What is the difference between these two values called?
A. net present value
B. internal return
C. payback value
D. profitability index
E. discounted payback
3. The length of time a firm must wait to recoup the money it has invested in a project is called the:
A. internal return period.
B. payback period.
C. profitability period.
D. discounted cash period.
E. valuation period.