LO 4.1.4: Calculate the rate of return (I/YR) for a situation. Flashcards
1
Q
What are we solving for with Rate of return (I/YR)
A
The interest rate / rate of return per year
2
Q
Another name for interest rate calculation
A
Annual rate of return calculation
3
Q
Why are interest rate calculations important for investments
A
- Comparing performance of one portfolio manager to another
- Comparing performance to a given benchmark, such as S&P 500
- Uneven cash flow calculations, such as NPV and IRR
