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Investment term of the day: internal rate of return (IRR)

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The internal rate of return (IRR) is used to measure and compare the profitability of investments. The rate shows how attractive a project is. If the IRR is higher than the desired rate of return on an investment this indicates a desirable opportunity.

IRR can be used to calculate expected returns on stocks and investments, including the yield to maturity on bonds.

Investopedia definition

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