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 255 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
:D TYSM

connor417

  • Member
  • Posts: 329
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Only one in 10 cancer deaths is caused by the primary tumor. The vast majority of cancer mortality is caused by cells breaking away from the main tumor and metastasizing to other parts of the body, such as the brain, bones, or liver.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

The most common childhood diseases include croup, chickenpox, ear infections, flu, pneumonia, ringworm, respiratory syncytial virus, scabies, head lice, and asthma.

Did you know?

The U.S. Pharmacopeia Medication Errors Reporting Program states that approximately 50% of all medication errors involve insulin.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

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
Rule of Nines. A method for determining percentage of body burned. Each different colored section re Rule of Nines. A method for determining percentage of body burned. Each different colored section re
Acceptable ranges of respiratory rate Acceptable ranges of respiratory rate
The internal and external anatomy of the kidney. The internal and external anatomy of the kidney.
Internal female reproductive organs. Internal female reproductive organs.
Relationship between Trust and Investment Relationship between Trust and Investment
Video: Bulk flow - Factors that influence bulk flow

For a complete list of videos, visit our video library