1. Which of the following statements is CORRECT? be uneven cash flows shown on a time line can be in the form of annuity payments, but none can be un amounts b. A time line is not meaningful unless all cash flows occur annually c. Time lines cannot be d. Time lines cannot constructed for annuities where the payments occur at the beginning of the periods be constructed in situations where some of the cash flows occur annually but others quarterly e. Time I for visualizing complex problems prior to doing actual calculations 2 A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now? a. $930.11 b. $884.19 c. $953.36 d. $977.20 e. $906.86 3. Which of the following statement(s) is/are true? I. When a loan is amortized, a relatively high percentage of the payment goes to reduce the outstanding principal in the early years, and the principal repayment's percentage declines in the loan's later years II. If a bank compounds savings accounts quarterly, the nominal rate will exceed the effective annual rate. III. The present value of a future sum decreases as either the discount rate or the number of periods per year increases, other things held constant a. I only b. II only c. II only d. e. I& III only None of the above choices 4. Which of the following statement(s) is/are true? I. In finance, the higher the risk, the higher the security's required return, other things held constant IL. If country A is more impatient in consumptions than country B then the nominal interest rate in country B will be higher than the nominal interest rate in country A. III. Other things held constant, the higher the expected inflation, the higher the nominal interest rate. a. I only b. II only c. III only d. All of the above None of the above choices e