Identify One Primary Strength and One Primary Weakness for Each

question 108

Essay

Identify one primary strength and one primary weakness for each of the following methods of investment analysis.
Net present value:
Strength:
Weakness:
Internal rate of return:
Strength:
Weakness:
Profitability index:
Strength:
Weakness:
Payback:
Strength:
Weakness:
Average accounting return:
Strength:
Weakness:

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Definitions:

Spot Exchange Rate

This is the current exchange rate at which two currencies can be exchanged immediately.

Eurocurrency

Currency deposited by national governments or corporations in banks outside their home market, primarily used for lending, borrowing, and investing internationally.

Political Risk

The risk of losing money due to political instability or changes in government policy affecting an investment.

American Options

A type of options contract that allows the holder to exercise the option at any time before the expiration date.