A Pension Plan Gives You 12 Possible Funds in Which

question 56

Short Answer

A pension plan gives you 12 possible funds in which to invest, but you are allowed to hold four at any given point in time. How many possible combinations of the 12 funds could you have in your portfolio?

---

Definitions:

Internal Rate Of Return

A metric used in capital budgeting to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Required Discount Rate

The minimum expected rate of return on an investment, used in the discounting process of present value calculations.

Profitability Index

A financial tool used to determine the desirability of an investment or project by dividing the present value of future cash flows by the initial investment cost.