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.

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