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 231 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
Great answer, keep it coming :)

carojassy25

  • Member
  • Posts: 299
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

The training of an anesthesiologist typically requires four years of college, 4 years of medical school, 1 year of internship, and 3 years of residency.

Long-term studies of the Glanville fritillary butterfly, Melitaea cinxia, have provided exceptional Long-term studies of the Glanville fritillary butterfly, Melitaea cinxia, have provided exceptional
The stomach. Longitudinal view showing regions and internal structures. The stomach. Longitudinal view showing regions and internal structures.
Hormonal Control of Development of the Internal Sex Organs Hormonal Control of Development of the Internal Sex Organs
Part of a Semantic Network in Long-Term Memory Part of a Semantic Network in Long-Term Memory
Comparing Internal Structures of the Planets Comparing Internal Structures of the Planets
Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ... Consider the production function ( ) 0.5 0.5 Y = AK L . Suppose both saving rate (s) and the ...
Video: Miller's reaction chamber experiment Animation

For a complete list of videos, visit our video library