To Determine the Compounded Annual Rate of Return on Investments

question 19

Multiple Choice

To determine the compounded annual rate of return on investments held for more than a year, investors typically use the present- value- based measure known as yield or

• A) internal rate of return.
• B) inflation- adjusted return.
• C) simple return.
• D) holding period return.

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Definitions:

Accounting Break-Even

The point at which total revenues equal total expenses, and the company generates neither profit nor loss from operations.

Depreciation Expense

The portion of the cost of a fixed asset that is considered as an expense due to its use, wear and tear, or obsolescence over its useful life.

Tax Rate

The metric used to figure out the tax obligation of individuals and corporate entities.

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.