Which of the Following Correctly Orders the Investment Rules of Average

question 41

Multiple Choice

Which of the following correctly orders the investment rules of average accounting return (AAR) , internal rate of return (IRR) , and net present value (NPV) from the most desirable to the least desirable?

• A) AAR, IRR, NPV.
• B) AAR, NPV, IRR.
• C) IRR, AAR, NPV.
• D) NPV, AAR, IRR.
• E) NPV, IRR, AAR.

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Definitions:

Normally Distributed

This describes a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Average Balance

The mean value derived from summing all balances over a certain period and dividing by the number of periods.

Standard Deviation

A gauge for the level of variance or scattering of values within a dataset.

Exponential Distribution

A continuous probability distribution used to model the time between events in a process where events occur continuously and independently at a constant average rate.