Under Certain Conditions, a Project May Have More Than One

question 39

True/False

Under certain conditions, a project may have more than one IRR.One such condition is when, in addition to the initial investment at time = 0, a negative cash flow (or cost) occurs at the end of the project's life.

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Definitions:

Modigliani and Miller

Two economists who introduced groundbreaking theories on the irrelevance of capital structure for a company's value and the dividend policy irrelevance in an ideal market.

Total Excess

The amount by which the total returns on an investment exceed the benchmark or guaranteed returns.

Bogey Portfolio

A benchmark or target portfolio with which the performance of an investment portfolio is compared.

Managed Portfolio

A collection of investments overseen by a financial professional who makes buy and sell decisions.