1. In what ways can the IRR make you give a flawed decision and what relationship the NVP have with the IRR?
300
words
2. Compare and contrast the uses of break-even analysis and sensitivity analysis in evaluating project risk.
300
words
3. What is the relation between a corporate bond’s expected return and the yield to maturity? In your answer, define default risk and explain how these rates incorporate default risk
300
words
4. Why should investors who identify positive-NPV trades be skeptical about their findings if they don’t inside information or a competitive advantage? What return should the average investor expect to receive?
300
words
Part 2
Briefly discuss some of the techniques that firms use to evaluate investments in order to decide which projects to pursue.
250 words