The Daily Technical #31: What levers have a positive/negative impact on the IRR of an investment?

Good morning. Welcome to the 31st edition of The Daily Technical. You’re here for one reason so let’s dive in.

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OVERVIEW OF YESTERDAY’S QUESTION
When would an investor prefer fixed rates over floating rates (and vice versa)?

This is a simple one: If interest rates are expected to fall in the near-term future, investors would prefer fixed rates. However, if interest rates are expected to increase, investors would prefer floating rates.

Common Mistakes

1. Overcomplicating the Response: Avoid diving too deep or getting sidetracked by irrelevant details. This can confuse the main point and weaken your answer. Stick to the core issue: rate trends and investor preference.

Key Takeaways / TLDR

• If investors expect rates to fall, they will prefer fixed rates; if they see them rising, they will lean towards floating.

  • Falling = Fixed; Rising = Floating

• Stay focused on the rate direction to answer efficiently and effectively.

TODAY’S QUESTION
What levers have a positive/negative impact on the IRR of an investment?

Type your answer here. Within 90 seconds you’ll have custom feedback in your inbox.

THAT’S A WRAP
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The HirePrep Team