1. Under the expectation theory, an upward sloping yield curve would indicate that a. The past short term and long term interest rate are not correct b. Today long-term rates will be lower than current short-term rates. c. The presence of liquidity premium. d. Investors expect short-term interest rate to fall in the future. e. Investors expect short-term interest rate to rise in the future 2. Monkey's Cookies balance sheet book values)as of today is as follows Call values are in SAR): Long-term debt (bonds, at par) Preferred stock Common stock (SAR 10 par) Retained eamings Total debt and equity 23,500,000 2,000,000 10,000,000 4,000,000 39,500,000 The bonds have a 7.1% coupon rate, payable 10 years from today. The yield to maturity isn% what is the current market value of the firm's debt? and a par value of SAR 1,000. They mature ex a. SAR 16,041,126 b. SAR 20,547,060 . SAR 21,808,722 d. SAR 20,006,348 e. SAR 18,023,737 NADEQ has equal amounts of low-risk, average-risk, and high-risk projects. You as the CFO know fror 3. FIN250 class you took at KFUPM that projects with different risks should have different WACC to eva them. The CEO disagrees with you and believes that the firm average WACC should be used to evalua types of projects. If the CEO's position is accepted, what is likely to happen over time? Things will generally even out over time, and, therefore, the firm's risk should remain constant over time. a. b. The CE0's recommendation would maximize the firm's intrinsic value e The company will take on too many low-risk projects and reject too many high-risk d The compuny will take on too many high-risk projects and reject too many low-risk e The company's overall WACC should decrease over time because its stock price should projects projects