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 262 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!

  • Member
  • Posts:
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

Women are 50% to 75% more likely than men to experience an adverse drug reaction.

Did you know?

In 1844, Charles Goodyear obtained the first patent for a rubber condom.

Did you know?

Malaria mortality rates are falling. Increased malaria prevention and control measures have greatly improved these rates. Since 2000, malaria mortality rates have fallen globally by 60% among all age groups, and by 65% among children under age 5.

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

Did you know?

Adolescents often feel clumsy during puberty because during this time of development, their hands and feet grow faster than their arms and legs do. The body is therefore out of proportion. One out of five adolescents actually experiences growing pains during this period.

Internal Inspection of the Nose Internal Inspection of the Nose
External and internal structures of nails. External and internal structures of nails.
Lymphatic vessels pick up excess tissue fluid, purify it in the lymph nodes, and then return it to t Lymphatic vessels pick up excess tissue fluid, purify it in the lymph nodes, and then return it to t
Population growth and growth rate, 1950 - 2100 Population growth and growth rate, 1950 - 2100
A 23 kg mass is connected to a nail on a frictionless table by a massless string 1.3 m long. ... A 23 kg mass is connected to a nail on a frictionless table by a massless string 1.3 m long. ...
Rate order question Rate order question
Video: Oxygen transport: association and dissociation & Factors that affect hemoglobin's saturation with O2

For a complete list of videos, visit our video library