Reinvestment rate problem

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Reference no: EM132042545

1. There are analysts who believe that when using the MIRR one should use the T-bill rate as the discount/compound rate. This

A. makes no sense at all.

B. would lead to higher IRRs.

C. would result in a more conservative (risk-averse) approach to investing.

D. only makes sense for companies dealing with government projects.

E. would have no impact investment decisions.

2. The so-called “Reinvestment Rate Problem” leads to

A. the use of the MIRR.

B. an overstatement of the return using the IRR.

C. a lower NPV.

D. two or more IRRs.

E. choosing low risk/low return investments.

Reference no: EM132042545

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