1. Bond ABC has 3 years remaining till maturity, $1000 face value, 10% coupon rate and selling above par. To buy this bond in the market you have to a price that equals to $1,285.*

True

False

2. You should ask $260,000 for an annuity that will pay you $25,000 per year for 25 years, with the first payment being made today if you think a fair required return is 7.5%.*

True

False

3. In risk-free environment, lower debt ratios always indicate good debt management.*

True

False

4. Excess inventory level will increase the current ratio and the liquidity of the company.*

True

False

5. The approximate yield to maturity of a 14 percent coupon rate, $1,000 par value bond priced at $1,160 if it has 16 years to maturity is 10.8%.*

True

False