Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks
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(4) Commercial Banks Explanation: Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
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Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : (3) Liquidity preference Explanation: According to the classical view, rate of interest is determined by the interaction of supply of and demand for capital. Thus this theory is popularly called ... higher shall be the rate of interest. The liquidity preference constitutes the demand for money.

Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Description : Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks

Last Answer : Liquidity preference

'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : 'Marginal efficiency of capital' is - (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer : (1) expected rate of return on new investment Explanation: The volume of investment depend upon the following two factors: (1) rate of interest: and (2) marginal efficiency of capital. Before ... partly on expectations of future yields and partly on the actual price of the capital good concerned.

‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Description : ‘Marginal efficiency of capital’ is (1) expected rate of return on new investment (2) expected rate of return of existing investment (3) difference between rate of profit and rate of interest (4) value of output per unit of capital invested

Last Answer :  expected rate of return on new investment

Bank Rate refers to the interest rate at which - (1) Commercial banks receive deposits from the public (2) Central bank gives loans to Commercial banks (3) Government loans are floated (4) Commercial banks grant loans to their customers

Description : Bank Rate refers to the interest rate at which - (1) Commercial banks receive deposits from the public (2) Central bank gives loans to Commercial banks (3) Government loans are floated (4) Commercial banks grant loans to their customers

Last Answer : (2) Central bank gives loans to Commercial banks Explanation: Bank rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are very short in duration.

The Liquidity Preference Theory of Interest was propounded by : (1) J.M. Keynes (2) David Ricardo (3) Alfred Marshall (4) Adam Smith

Description : The Liquidity Preference Theory of Interest was propounded by : (1) J.M. Keynes (2) David Ricardo (3) Alfred Marshall (4) Adam Smith

Last Answer : (1) J.M. Keynes Explanation: In macroeconomic theory, liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John May-nard Keynes in his book ... Money (1936) to explain determination of the interest rate by the supply and demand for money.

The Liquidity Preference Theory of Interest was propounded by : (1) J.M. Keynes (2) David Ricardo (3) Alfred Marshall (4) Adam Smith

Description : The Liquidity Preference Theory of Interest was propounded by : (1) J.M. Keynes (2) David Ricardo (3) Alfred Marshall (4) Adam Smith

Last Answer : J.M. Keynes

Which one of the following statements is false ? (A) The Open Market Operations involve the sale or purchase of govt. securities by the Central Bank (B) The RBI manages longterm liquidity through rapos (C) The RBI manages longterm liquidity through Open Market Operations (D) Open Market Operations do not alter the total stock of govt. securities but change the proportion of govt. securities held by the RBI, Commercial Banks and Co-operative Banks

Description : Which one of the following statements is false ? (A) The Open Market Operations involve the sale or purchase of govt. securities by the Central Bank (B) The RBI manages longterm liquidity through ... change the proportion of govt. securities held by the RBI, Commercial Banks and Co-operative Banks

Last Answer : Answer: The RBI manages longterm liquidity through rapos

Liquidity Preference means - (1) holding assets in the form of bonds and shares (2) holding assets in the form of cash (3) creation of immovable property (4) assets in the form of jewellery

Description : Liquidity Preference means - (1) holding assets in the form of bonds and shares (2) holding assets in the form of cash (3) creation of immovable property (4) assets in the form of jewellery

Last Answer : (2) holding assets in the form of cash Explanation: Liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in ... than other assets, in Keynesian theory based on motives of transactions, precaution, and speculation.

Liquidity Preference means (1) holding assets in the form of bonds and shares (2) holding assets in the form of cash (3) creation of immovable property (4) assets in the form of jewellery

Description : Liquidity Preference means (1) holding assets in the form of bonds and shares (2) holding assets in the form of cash (3) creation of immovable property (4) assets in the form of jewellery

Last Answer : holding assets in the form of cash 

The return on investment (ROI) may be calculated as A. Net profit before interest, tax and dividend / Capital employed B. Net profit after interest, tax and dividend / Shareholder's fund C. ( Net profit - preference dividend )/ No. of equity shares D. Return on Investment / Net profit ratio

Description : The return on investment (ROI) may be calculated as A. Net profit before interest, tax and dividend / Capital employed B. Net profit after interest, tax and dividend / Shareholder's fund C. ( Net profit - preference dividend )/ No. of equity shares D. Return on Investment / Net profit ratio

Last Answer : A. Net profit before interest, tax and dividend / Capital employed

Why do we allow the Federal Reserve loan money to commercial banks at almost 0% interest, who then loan the tax payers this money at a much higher interest rate?

Description : Why do we allow the Federal Reserve loan money to commercial banks at almost 0% interest, who then loan the tax payers this money at a much higher interest rate?

Last Answer : If you want to learn more about the Federal Reserve system and how it works, start with Wikipedia and then, for fun, consider asking targeted questions of the conspiracy theorists here on Fluther. ... takes something of yours. Interest happens when you choose to pay for the opportunity to borrow.

Bank rate is the rate of interest: (1) At which public borrows money from Commercial Banks (2) At which public borrows money from R.B.I. (3) At which Commercial Banks borrow money from R.B.I. (4) At which Commercial Banks borrow money from the public

Description : Bank rate is the rate of interest: (1) At which public borrows money from Commercial Banks (2) At which public borrows money from R.B.I. (3) At which Commercial Banks borrow money from R.B.I. (4) At which Commercial Banks borrow money from the public

Last Answer : (3) At which Commercial Banks borrow money from R.B.I. Explanation: Bank Rate is the interest rate at which a nation's central bank lends money to domestic banks. Often these loans are ... activity. Regulation of the economy through management of the money supply is referred to as monetary policy.

Bank rate is the rate of interest - (1) at which public borrows money from Commercial Bank (2) at which public borrows money from RBI (3) at which Commercial Banks borrow money from RBI (4) at which Commercial Banks borrow money from public

Description : Bank rate is the rate of interest - (1) at which public borrows money from Commercial Bank (2) at which public borrows money from RBI (3) at which Commercial Banks borrow money from RBI (4) at which Commercial Banks borrow money from public

Last Answer : (3) at which Commercial Banks borrow money from RBI Explanation: Bank Rate is the interest rate at which a nation’s central bank lends money to domestic banks. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity.

Bank rate is that rate on which - (1) Any bank lends money to an individual (2) State Bank of India gives loan to the rural banks (3) Central Bank of Country lends money to the commercial banks (4) Rural bank gives loan to cooperative societies

Description : Bank rate is that rate on which - (1) Any bank lends money to an individual (2) State Bank of India gives loan to the rural banks (3) Central Bank of Country lends money to the commercial banks (4) Rural bank gives loan to cooperative societies

Last Answer : (3) Central Bank of Country lends money to the commercial banks Explanation: Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on the loans and ... reserve bank, while the repo rate is the rate at which the banks borrow from the central bank.

Bank rate is that rate on which– (1) Any bank lends money to an individual (2) State Bank of India gives loan to the rural banks (3) Central Bank of Country lends money to the commercial banks (4) Rural bank gives loan to cooperative societies

Description : Bank rate is that rate on which– (1) Any bank lends money to an individual (2) State Bank of India gives loan to the rural banks (3) Central Bank of Country lends money to the commercial banks (4) Rural bank gives loan to cooperative societies

Last Answer : Central Bank of Country lends money to the commercial banks

Savings rate is relatively low in developed economies because of - (1) Low per capita income (2) Welfare programmes (3) Liquidity/ Borrowing constraint (4) High interest rate

Description : Savings rate is relatively low in developed economies because of - (1) Low per capita income (2) Welfare programmes (3) Liquidity/ Borrowing constraint (4) High interest rate

Last Answer : (2) Welfare programmes Explanation: As a general rule, saving is considered as a derivative of consumption. Developed economies have lower saving rates than developing countries because ... generations raises national consumption and lowers national saving (The Concise Encyclopedia of Economics).

Under the liquidity trap conditions, an increase in money supply will (a) increase investment (b) increase level of employment (c) reduce the rate of interest (d) have no effect on interest rate, investment and employment

Description : Under the liquidity trap conditions, an increase in money supply will (a) increase investment (b) increase level of employment (c) reduce the rate of interest (d) have no effect on interest rate, investment and employment

Last Answer : (c) reduce the rate of interest

Savings rate is relatively low in developed economies because of (1) Low per capita income (2) Welfare programmes (3) Liquidity/Borrowing constraint (4) High interest rate

Description : Savings rate is relatively low in developed economies because of (1) Low per capita income (2) Welfare programmes (3) Liquidity/Borrowing constraint (4) High interest rate

Last Answer : Welfare programmes

Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Description : Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Last Answer : (4) increase in capital return Explanation: Interest rate increase the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate ... . All of these factors raise output and employment as well as investment and consumer spending.

Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Description : Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Last Answer : (4) Return on capital increases Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. ... rate per unit of time, which is why it is called the rate of return on capital.

Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Description : Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return

Last Answer : increase in capital return

Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Description : Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases

Last Answer : Return on capital increases

A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Description : A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Last Answer : (1) restricts lending Explanation: Statutory Liquidity Ratio refers to the amount that the commercial banks require to maintain in the form gold or government approved securities before providing credit to ... , suck liquidity in the market, to tighten the measure to safeguard the customers' money.

The ratio of a bank's cash holdings to its total deposit liabilities is called the - (1) Variable Reserve Ratio (2) Cash Reserve Ratio (3) Statutory Liquidity Ratio (4) Minimum Reserve Ratio

Description : The ratio of a bank's cash holdings to its total deposit liabilities is called the - (1) Variable Reserve Ratio (2) Cash Reserve Ratio (3) Statutory Liquidity Ratio (4) Minimum Reserve Ratio

Last Answer : (2) Cash Reserve Ratio Explanation: Cash Reserve Ratio (CRR) is the amount of funds that the banks have to keep with the RBI. If the central bank decides to increase the CRR, the avail-able amount with the banks comes down. The RBI uses the CRR to drain out excessive money from the system.

A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks

Description : A high Statutory Liquidity Ratio (SLR) (1) restricts lending (2) increases supply of cash (3) provides funds to the state (4) increases the strength of the banks 

Last Answer : restricts lending 

The ratio of a bank’s cash holdings to its total deposit liabilities is called the (1) Variable Reserve Ratio (2) Cash Reserve Ratio (3) Statutory Liquidity Ratio (4) Minimum Reserve Ratio

Description : The ratio of a bank’s cash holdings to its total deposit liabilities is called the (1) Variable Reserve Ratio (2) Cash Reserve Ratio (3) Statutory Liquidity Ratio (4) Minimum Reserve Ratio

Last Answer : Cash Reserve Ratio

What is the purpose of KYC in banking? A. It is used for customer identification B. It is used for increasing the CRR of banks C. It is used against money laundering D. It is used by the central bank to control liquidity E. Both (A) and (C)

Description : What is the purpose of KYC in banking? A. It is used for customer identification B. It is used for increasing the CRR of banks C. It is used against money laundering D. It is used by the central bank to control liquidity E. Both (A) and (C)

Last Answer : E. Both (A) and (C) Explanation: Know your customer (KYC) is the process of a business verifying the identity of its clients. Know your customer policies are becoming much more important globally to prevent identity theft, financial fraud, money laundering and terrorist financing.

Is there a relatively safe way to have a 10% return on invested money in this economy?

Description : Is there a relatively safe way to have a 10% return on invested money in this economy?

Last Answer : eden2eve: I suggest an investment in pine-trees. They take about 45 years to mature but the return is pretty close to 10% over the life of the investment and they are relatively safe. You can lose ... to develop a good relationship with a forester to show you the ropes, mark trees for thinning, etc.

"Interest is a reward for parting with liquidity" is according to - (1) Keynes (2) Marshall (3) Haberler (4) Ohlin

Description : "Interest is a reward for parting with liquidity" is according to - (1) Keynes (2) Marshall (3) Haberler (4) Ohlin

Last Answer : (1) Keynes Explanation: In macroeconomic theory, liquidity preference refers to the demand for money, considered as liquidity. The concept was first developed by John Maynard Keynes in his book The ... a reward for saving, interest in the Keynesian analysis is a reward for parting with liquidity.

In the calculation of return on shareholders investments the referred investment deals with A. All reserves B. Preference and equity capital only C. All appropriations D. All of the above

Description : In the calculation of return on shareholders investments the referred investment deals with A. All reserves B. Preference and equity capital only C. All appropriations D. All of the above

Last Answer : D. All of the above

Regional Rural Banks arc sponsored by (1) Nationalized Commercial Bank (2) Reserve Bank of India (3) State Bank of India (4) Government of India

Description : Regional Rural Banks arc sponsored by (1) Nationalized Commercial Bank (2) Reserve Bank of India (3) State Bank of India (4) Government of India

Last Answer : (1) Nationalized Commercial Bank Explanation: The Narasimham committee conceptualized the foundation of regional rural banks in India. Five regional rural banks were set up on October 2. 1975. There ... Bank. United Bank of India and United Commercial Bank, which sponsored the regional rural banks.

Open Market Operations refer to (1) Borrowings by Scheduled banks from RBI (2) Lending by Commercial banks to industry (3) Purchase and sale of Government securities by RBI (4) Deposit mobilization

Description : Open Market Operations refer to (1) Borrowings by Scheduled banks from RBI (2) Lending by Commercial banks to industry (3) Purchase and sale of Government securities by RBI (4) Deposit mobilization

Last Answer : (3) Purchase and sale of Government securities by RBI Explanation: Open Market Operation (OMO) refers to the buying and selling of government securities in the open market in order to expand or ... in the banking system. A central bank uses OMO as the primary means of implementing monetary policy.

The RBI can decrease the money supply in the market by: a) selling government securities b) buying government securities c) borrowing money from commercial banks d) none of the above

Description : The RBI can decrease the money supply in the market by: a) selling government securities b) buying government securities c) borrowing money from commercial banks d) none of the above

Last Answer : a) selling government securities

Regional Rural Banks are sponsored by (1) Nationalised Commercial Bank (2) Reserve Bank of India (3) State Bank of India (4) Government of India

Description : Regional Rural Banks are sponsored by (1) Nationalised Commercial Bank (2) Reserve Bank of India (3) State Bank of India (4) Government of India

Last Answer :  Nationalised Commercial Bank

Open Market Operations refer to __________ . (1) Borrowings by Scheduled banks from RBI (2) Lending by Commercial banks to industry (3) Purchase and sale of Government securities by RBI (4) Deposit mobilisation

Description : Open Market Operations refer to __________ . (1) Borrowings by Scheduled banks from RBI (2) Lending by Commercial banks to industry (3) Purchase and sale of Government securities by RBI (4) Deposit mobilisation

Last Answer : Purchase and sale of Government securities by RBI

Speculative demand for cash is determined by - (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions

Description : Speculative demand for cash is determined by - (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions

Last Answer : (1) The rate of interest Explanation: Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing. ... rate, more people will expect a rise in interest rate (or a fall in bond prices).

Speculative demand for cash is determined by (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions

Description : Speculative demand for cash is determined by (1) The rate of interest (2) the level of income (3) the general price level (4) the market conditions

Last Answer : The rate of interest

Capital : Output Ratio of a measures - (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Description : Capital : Output Ratio of a measures - (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Last Answer : (2) the amount of capital invested per unit of output Explanation: Capital output ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency to be ... its resources in lieu of capital to boost its output; hence the resulting capital output ratio is low.

Capital output ratio of a commodity measures - (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Description : Capital output ratio of a commodity measures - (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Last Answer : (2) the amount of capital invested per unit of output Explanation: Capital Output Ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency ... order to increase the output. When countries use their natural resources instead of capital then COR reduces.

What is meant by 'Capital Gain'? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these

Description : What is meant by 'Capital Gain'? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these

Last Answer : (2) Appreciation in the money value of assets Explanation: A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the ... a capital gain represents an appreciation in value accruing over a prescribed period of time on the asset.

What is meant by ‘Capital Gain’ ? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these

Description : What is meant by ‘Capital Gain’ ? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these

Last Answer : Appreciation in the money value of assets

Capital output ratio of a commodity measures (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Description : Capital output ratio of a commodity measures (1) its per unit cost of production (2) the amount of capital invested per unit of output (3) the ratio of capital depreciation to quantity of output (4) the ratio of working capital employed to quantity of output

Last Answer : the amount of capital invested per unit of output

The payback method for the measurement of return on investment (A) Gives a correct picture of profitability (B) Underemphasises liquidity (C) Does not measure the discounted rate of return (D) Takes into account the cash inflows after the recovery of investments

Description : The payback method for the measurement of return on investment (A) Gives a correct picture of profitability (B) Underemphasises liquidity (C) Does not measure the discounted rate of return (D) Takes into account the cash inflows after the recovery of investments

Last Answer : (C) Does not measure the discounted rate of return

By increasing the 'Bank Rate', the RBI can: a) provide incentives to commercial banks to lend more to public b) provide incentives to commercial banks to lend less to public c) increase the money supply in the market d) none of the above

Description : By increasing the 'Bank Rate', the RBI can: a) provide incentives to commercial banks to lend more to public b) provide incentives to commercial banks to lend less to public c) increase the money supply in the market d) none of the above

Last Answer : b) provide incentives to commercial banks to lend less to public Bank rate is the rate at which commercial banks can borrow money from the RBI. If the rate is higher, then taking money from RBI becomes difficult, so the banks will lend less to public. And vice-versa.

What is 'Bank rate'? a) The rate at which commercial banks borrow money from RBI b) The rate at which commercial banks lend money to customers c) The rate at which commercial banks lend money to RBI d) none of the above

Description : What is 'Bank rate'? a) The rate at which commercial banks borrow money from RBI b) The rate at which commercial banks lend money to customers c) The rate at which commercial banks lend money to RBI d) none of the above

Last Answer : a) The rate at which commercial banks borrow money from RBI Bank rate is the rate at which commercial banks can borrow money from the RBI. If the rate is higher, then taking money from RBI becomes difficult, so the banks will lend less to public. And vice-versa.

Which organisation has facilitated a network of NGO’s for setting up grain banks in Maharashtra? a. Amul b. Mother Dairy c. Academy of Development Science d. Central Government

Description : Which organisation has facilitated a network of NGO’s for setting up grain banks in Maharashtra? a. Amul b. Mother Dairy c. Academy of Development Science d. Central Government

Last Answer : c. Academy of Development Science

Under flexible exchange rate system, the exchange rate is determined by - (1) the Central Bank of the country (2) the forces of demand and supply in the foreign exchange market (3) the price of gold (4) the purchasing power of currencies

Description : Under flexible exchange rate system, the exchange rate is determined by - (1) the Central Bank of the country (2) the forces of demand and supply in the foreign exchange market (3) the price of gold (4) the purchasing power of currencies

Last Answer : (2) the forces of demand and supply in the foreign exchange market Explanation: A floating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to ... by the foreign-exchange market through supply and demand for that particular currency relative to other currencies.

Under flexible exchange rate system, the exchange rate is determined by (1) the Central Bank of the country (2) the forces of demand and supply in the foreign exchange market (3) the price of gold (4) the purchasing power of currencies

Description : Under flexible exchange rate system, the exchange rate is determined by (1) the Central Bank of the country (2) the forces of demand and supply in the foreign exchange market (3) the price of gold (4) the purchasing power of currencies 

Last Answer :  the forces of demand and supply in the foreign exchange market

The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Description : The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.

Last Answer : (3) falls as the annual yield of an investment rises. Explanation: The internal rate of return on an investment or project is the "annualized effective compounded re-turn rate" or discount rate ... the investment equals the net present value of the benefits (positive cash flows) of the investment.