A:
A client asks an IA to calculate what rate of return must be earned to grow $10,000 to $25,000 in five years. The rate of return the IA must calculate is called:
a. Future return
b. Internal rate of return
c. Total return
d. Expected return
The correct answer is "b": internal rate of return is the value that must be solved for. While "expected return" may sound like a correct answer, the actual term used is internal rate of return.
RELATED FAQS

Under what circumstances can an IA choose to sell a security for a client without ...
A. When the transaction is less than $5,000B. When the IA decides only how many shares to sellC. When the client tells the ... Read Answer >> 
How is the expected market return determined when calculating market risk premium?
Find out how the expected market return rate is determined when calculating market risk premium and how these figures are ... Read Answer >> 
The real rate of return is the amount of interest earned over and above the?
The real rate of return is the amount of interest earned over and above the: a. discount rate. b. tax rate. c. inflation ... Read Answer >> 
How far above the hurdle rate makes for a good investment?
Find out how the hurdle rate is related to the internal rate of return. Learn how the two factors assist financial leaders ... Read Answer >> 
What is the difference between a company's annual return and its annualized return?
Understand the importance of calculating a company's annual return and its annualized return, and learn the differences between ... Read Answer >>
Related Articles

Investing
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Small Business
Understanding the Internal Rate of Return Rule
The internal rate of return rule is a popular method used to compare investments or projects. 
Investing
How to Calculate Required Rate of Return
The required rate of return is used by investors and corporations to evaluate investments. Find out how to calculate it. 
Investing
Income vs. Total Return: What to Consider
What should clients consider between income and total return investing? 
Investing
How To Calculate Your Investment Return
How much are your investments actually returning? Find out why the method of calculation matters. 
Investing
An Inside Look At Internal Auditors
Find out why these number crunchers are part of every chief officer's dream team. 
Investing
Calculating The Means
Learn more about the different ways you can calculate your portfolio's average return. 
Investing
The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate
The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that ... 
Investing
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time.
RELATED TERMS

Average Return
The simple mathematical average of a series of returns generated ... 
Total Return
When measuring performance, the actual rate of return of an investment ... 
Target Return
A pricing model that prices a business based on what an investor ... 
Accounting Rate of Return  ARR
The amount of profit, or return, that an individual can expect ... 
Yearly Rate Of Return Method
More commonly referred to as annual percentage rate. It is the ... 
Abnormal Return
A term used to describe the returns generated by a given security ...