Discussion
Consider the following statements about rate of return.
1. The internal rate of return assumes reinvestment at itself 2. The alternative with the highest rate of return is always best 3. Two sign changes permit at most two positive roots
Answer: B
Correct answer: 1 and 3 only are correct
Statements 1 and 3 are correct: the internal rate carries an implicit reinvestment assumption at its own value, and Descartes’ rule allows at most two positive roots for two sign changes. Statement 2 is the central error of the method - a rate is a ratio and ignores scale, so the highest rate need not identify the best alternative.
No comment is present. Be the first to comment.
Loading…
Post your comment
Please log in or register to post a comment.
Examination Categories
- SSC Exams
- Banking Exams
- Teaching Exams
- Civil Services Exams
- Railways Exams
- Engineering Recruitment Exams
- Defence Exams
- State Government Exams
- Police Exams
- Insurance Exams
- Nursing Exams
- Other Government Exams
- NRA CET
- PG Entrance Exams
- Campus Placement
- MBA Entrance Exams
- CUET and UG Entrance
- Judiciary Exams
- Regulatory Body Exams
- Software Development