When the Net Present Value Is Negative, the Internal Rate

question 56

Multiple Choice

When the net present value is negative, the internal rate of return is __________ the cost of capital.

• A) greater than
• B) greater than or equal to
• C) less than
• D) equal to

---

Definitions:

Adjustment Technique

Methods or procedures used to modify financial or operational data for comparison or analysis purposes.

Well-Diversified Portfolio

An investment portfolio comprising a wide variety of assets to minimize risk through diversification.

Single Index Model

A simplified method to estimate the return of a security or portfolio by relating it to the return of a single market index, using statistical measures.

Portfolio's Sigma

A term referring to the standard deviation of a portfolio, quantifying the portfolio's volatility or risk.