An Internal Rate of Return (IRR) Is the Discount Rate

question 50

Multiple Choice

An internal rate of return (IRR) is the discount rate that

• A) produces a present value of future benefits equal to the market price of a share.
• B) is the minimal rate of return an investor will accept.
• C) provides an investor with their required return.
• D) represents the minimal rate required to create a positive net present value.

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Definitions:

Actuarial Information

Data related to evaluating risks and determining rates or premiums in the insurance and finance industries, based on statistical analyses.

Conversion Privilege

A feature of certain securities that allows the holder to convert them into a different type of security, typically shares of the issuing company's stock.

Market Value Method

An accounting approach that values and records assets and liabilities based on their current market prices.