Question

Which of the following attributes of common stock best describes why internal rate of return (IRR) is not generally used to determine the return on common stock?

A)Uneven cash flows.
B)Common stock does not have a net present value.
C)Uneven cash flows and no maturity.
D)Uneven cash flows, no maturity date and price.

Answer 1

The attribute of common stock that best describes why internal rate of return (IRR) is not generally used to determine the return on common stock is uneven cash flows and no maturity.

Step-by-step explanation:

The attribute of common stock that best describes why internal rate of return (IRR) is not generally used to determine the return on common stock is uneven cash flows and no maturity.

Common stock represents ownership in a company and does not have a fixed maturity date, which makes it difficult to determine the IRR. Additionally, the cash flows from common stock investments are often unpredictable and can vary over time, which further complicates the use of IRR for calculating returns on common stock.