The Internal Rate of Return (IRR) Is the Interest Rate

question 53

True/False

The internal rate of return (IRR) is the interest rate that sets the net present value (NPV) of the cash flows equal to zero.

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Definitions:

Risk-Free Asset

An investment guaranteed to return the original investment without any loss, typically associated with high-grade government securities.

Indifference Curve

In economics, a curve that represents different combinations of goods or services among which a consumer is indifferent, showing preferences.

Risk-Free Asset

An investment that is expected to deliver its returns without any risk of financial loss, traditionally government bonds are considered close to risk-free.

Utility

The measure of the welfare or satisfaction of an investor.