Basic IRR rule

Similar financial terms

Basic balance
In a balance of payments, the basic balance is the net balance of the combination of the current account and the capital account.

Basic business strategies
Key strategies a firm intends to pursue in carrying out its business plan.

Irrelevance result
A proposition by Modigliani and Miller which states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions.

Irredeemable bonds
Bonds with a fixed maturity but not subject to prior redemption; bonds that cannot be called for redemption by the issuer (payer or obligor) before maturity. They should not be confused with perpetual bonds or intermediate bonds. UK Irredeemable (undated) bonds have no final maturity date. They are callable by the government at any time within 3 months. As their coupons range between 2.5% and 4% they are unlikely to be called. War loan, issued by the UK government during the First World War ...

IRR
Iranian Rial from the Islamic Republic of Iran.

Internal Rate of Return (IRR)
The internal rate of Return (IRR) is the discount rate that equals the present value of a future steam of cash flows to the initial investment. The IRR can be thought of as the annualized rate of return (in percent) of an investment using compound interest rate calculations. The IRR calculation is very useful when a number of future cash flows on which an interest rate needs to be calculated.

Financial Institutions Reform (FIRREA)
In August of 1989 the Financial Institutions Reform Recovery and Enforcement Act (FIRREA) was created. FIRREA abolishes the Federal Home Loan Bank Board and FSLIC, switches Savings & Loan regulation to newly created Office of Thrift Supervision. Deposit insurance function shifted to the FDIC. A new entity, the Resolution Trust Corporation is created to resolve the insolvent S&Ls.

Other major provisions of FIRREA include: $50 billion of new borrowing authority, with most financed from ...

Administrative pricing rules
IRS rules used to allocate income on export sales to a foreign sales corporation.

Variance rule
Specifies the permitted minimum or maximum quantity of securities that can be delivered to satisfy a TBA trade. For Ginnie Mae, Fannie Mae, and Feddie Mac pass-through securities, the accepted variance is plus or minus 2.499999 percent per million of the par value of the TBA quantity.

Tick-test rules
SEC-imposed restrictions on when a short sale may be executed, intended to prevent investors from destabilizing the price of a stock when the market price is falling. A short sale can be made only when either (a) the sale price of the particular stock is higher than the last trade price (referred to as an uptick trade) or (b) if there is no change in the last trade price of the particular stock, the previous trade price must be higher than the trade price that preceded it (referred to as a zero ...

Rule 415
Rule enacted in 1982 that permits firms to file shelf registration statements.

Rule 144a
SEC rule allowing qualified institutional buyers to buy and trade unregistered securities.

Net present value rule
An investment is worth making if it has a positive NPV. Projects with negative NPVs should be rejected.

Multirule system
A technical trading strategy that combines mechanical rules, such as the CRISMA (cumulative volume, relative strength, moving average) Trading System of Pruitt and White.

Rule-of-72
This is a very handy "rule" that lets you mentally calculate how long it takes you to double an investment (i.e. compounding), given a particular interest rate. You divide 72 by the interest rate in order to get the number of years. For example, a 7% interest rate would require just over 10 years for an investment to double in value. A 15% interest rate would take between 4 and 5 years to double, and so on.

Bayes rule
Treating probability as a logic, Thomas Bayes defined the following:

Pr(A|B)=Pr(B|A)Pr(A)/Pr(B)

For example, probability that the weather was bad given that our friends played soccer can be calculated as: Pr(play soccer in the rain)Pr(rain)/Pr(play soccer).