Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1. All other parameters held constant, as the spread between the yield and the coupon rate on a bond decreases, the price of the bond
1. All other parameters held constant, as the spread between the yield and the coupon rate on a bond decreases, the price of the bond
- A. falls further below par.
- B. rises further above par.
- C. gets closer to par.
- D. approaches infinity.
2. If the net present value of a project is negative, then
- A. the discount rate used for the future expected cash flows is less than the internal rate of return for the project.
- B. the discount rate used for the future expected cash flows is incorrect.
- C. the discount rate used for the future expected cash flows is greater than the internal rate of return for the project.
- D. the discount rate used for the future expected cash flows is equal to the internal rate of return for the project.
3. The net present value of a project has been found to be $0. The internal rate of return on the project is 9.6%. If a discount rate of 7.0% had been used instead to determine the net present value, then
- A. The project would have been accepted.
- B. The internal rate of return would have changed.
- C. The net present value would have stayed the same.
- D. The project would have been rejected.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started