The Internal Rate of Return of an Investment Is

question 5

Multiple Choice

The internal rate of return of an investment is:

• A) the same as return on investment.
• B) zero when the present value of an investment equals its cost.
• C) the interest rate that equates the present value of an investment with its cost.
• D) equal to the market rate of interest when an investment is made.

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Definitions:

Agent

An individual or entity authorized to act on behalf of another, typically in a business or legal capacity, entering into agreements or making decisions.

Fiduciary Duties

Obligations one party has to act in the best interest of another party, such as a trustee towards a beneficiary.

General Partner

A type of ownership in a partnership where the general partner is responsible for the management of the partnership and is personally liable for its debts.

Limited Partnership

A partnership where some members have limited liabilities to the amount they invest, while at least one partner has unlimited liability.