1. If a bond's coupon rate is greater than the market rate of interest, then the bond will sell:

a. All of the answers are correct is true.

b. at a price less than its face value.

c. at a price greater than its face value.

d. at a price equal to its face value.

e. none of the answers is correct is true.

2. (TRUE or FALSE?) With the IRR, which is based on accounting numbers, there is no economic rationale that links a particular acceptance criterion to the goal of maximizing stockholder value.

3. (TRUE or FALSE?) The constant-growth dividend model tells us that the current price of a share of stock is today's dividend multiplied by the difference between the discount rate and the dividend growth rate.

4. (TRUE or FALSE?) In the general dividend-valuation model, the price of a share of stock is the present value of all expected future dividends.

5. (TRUE or FALSE?) Long-term bonds carry substantially more interest rate risk than short-term bonds.

6. (TRUE or FALSE?). The greater the risk, the larger the return investors require as compensation for bearing that risk.

7. (TRUE or FALSE?) As interest rates fall, the prices of bonds decline.