The Possibility That More Than One Discount Rate Can Cause

question 15

Multiple Choice

The possibility that more than one discount rate can cause the net present value of an investment to equal zero is referred to as:

• A)duplication.
• B)the net present value profile.
• C)multiple rates of return.
• D)the AAR problem.
• E)the dual dilemma.

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Definitions:

Catch-Up Effect

The theory that poorer economies will tend to grow at faster rates than wealthier ones, allowing them to catch up in terms of income and other economic measures.

Capital

Refers to assets or resources that businesses or individuals use to generate wealth through investment.

Saving Rates

The proportion of disposable income that individuals or an economy as a whole save rather than spend on consumption.

Income Growth

An increase in the amount of money earned by individuals or households over time.