A Simplification and an Extension of the Bernhard-deFaro Sufficient Condition for a Unique Non-Negative Internal Rate of Return

Abstract

In recent issues of the Journal of Financial and Quantitative Analysis, several papers ([7], [1], [4], and [6]) have presented simple sufficient conditions for detecting whether a given pattern of cash flows over time has a unique, simple, nonnegative internal rate of return. One such condition, developed independently by Bernhard [4] and deFaro [6], is easily shown to be the most general of the lot, i.e., to contain the others as special cases. See, e.g., deFaro[6].