This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: An investment is profitable as long as its internal rate of return is equal to the rate of interest. ... (Read 84 times)

imowrer

  • Hero Member
  • *****
  • Posts: 514
on: Jul 1, 2018
An investment is profitable as long as its internal rate of return is equal to the rate of interest.
 
  Indicate whether the statement is true or false

Question 2

A recent purchaser of a bond that agrees to pay an annual nominal amount would hope that interest rates do not rise.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

aprice35067

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jul 1, 2018
Answer to Question 1

False. Such an investment has a profit of zero. The investment is profitable if the internal rate of return exceeds the interest rate.

Answer to Question 2

True, for two reasons. First, the person is locked into a lower interest rate. Second, if the person needs to sell the bond, he will incur a loss since at higher interest rates, bond prices fall.


imowrer

  • Member
  • Posts: 514
Reply 2 on: Jul 1, 2018
Gracias!

kswal303

  • Member
  • Posts: 316
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Asthma occurs in one in 11 children and in one in 12 adults. African Americans and Latinos have a higher risk for developing asthma than other groups.

Did you know?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Asthma cases in Americans are about 75% higher today than they were in 1980.

The mortality rate in the United States increases with age and is lower for women than men at every ... The mortality rate in the United States increases with age and is lower for women than men at every ...
Snap-ring pliers are also called lock-ring pliers, and they are designed to remove internal and ... Snap-ring pliers are also called lock-ring pliers, and they are designed to remove internal and ...
Reaction 3: The Second Investment of ATP Reaction 3: The Second Investment of ATP
For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ... For each function f(x) = 6x^2 - 4, estimate the instantaneous rate of change for the given ...
A non-interest-bearing five-year note for $54600.00 issued May 1, 2015, is discounted April 1, ... A non-interest-bearing five-year note for $54600.00 issued May 1, 2015, is discounted April 1, ...
Bacteria with Internal Membranes Bacteria with Internal Membranes
Video: Wound Cultures

For a complete list of videos, visit our video library