Q599
An interest rate which is used in calculation of cash flows of bonds is called
A.
required rate of redemption
B.
required rate of earning
C.
required rate of return
AnswerD.
required option
Answer: Option C
Solution
Answer: Option C
Solution:
An interest rate which is used in calculation of cash flows of bonds is called required rate of return. The required rate of return is the minimum return an investor expects to achieve by investing in a project. An investor typically sets the required rate of return by adding a risk premium to the interest percentage that could be gained by investing excess funds in a risk-free investment.