The Use of the Partitioning Theorem to Prove Further Results Regarding the Distribution of IRRs: And an Open Question

In 2018, Cuthbert proved that any transaction vector can be uniquely partitioned into a sequence of pure investments with strictly decreasing internal rates of return (IRRs). In a subsequent paper, Cuthbert used the partitioning theorem to derive a new sufficient condition for a transaction to have...

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Bibliographic Details
Published in:Journal of risk and financial management 2023-08, Vol.16 (8), p.348
Main Author: Cuthbert, James Rutherford
Format: Article
Language:English
Subjects:
Decision making
Discount rates
Internal rate of return
Net present value
Rate of return
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Summary:In 2018, Cuthbert proved that any transaction vector can be uniquely partitioned into a sequence of pure investments with strictly decreasing internal rates of return (IRRs). In a subsequent paper, Cuthbert used the partitioning theorem to derive a new sufficient condition for a transaction to have a unique IRR and proved some results regarding how the IRRs of a transaction must be distributed. This paper proves some further results on the distribution of IRRs. It also poses an open question regarding the possible relationship between the number of IRRs of a transaction and the relative sizes of the smallest and largest IRRs of the terms in the unique partition of that transaction.
ISSN:1911-8074
1911-8066
1911-8074
DOI:10.3390/jrfm16080348