Long term projects often offer high rate of return than short term projects. Just because it offers a high rate of return, it does not mean that it will have a higher NPV. The opposite is true for short-term bonds. If short-term bonds are offering a lower rate of return, it does not mean that it will have a lower NPV.

Keep the following things in mind:

Links of Previous Main Topic:-

• Working with time varying rates of return
• Inflation
• Study of treasury bills and yield curve in time varying interest rates
• Why is the slope of yield curve upward

Links of Next Financial Accounting Topics:-

• Extracting forward interest rates
• Shorting and locking in forward interest rate
• Bond duration
• Duration stability
• Duration hedging
• Continuous compounding
• Institutional knowledge about compounding and price quotes