10. What is the present value of a $22,000 gift to be received 7 years from today at a 1% rate of return?

A. $17,591.15

B. $17,958.55

C. $20.519.80

D. $20,707.21

E. $20,807.45

11. What is the future value of $1,000 after one year, assuming a 9% rate of return to be compounded daily?

A. $1,006.51

B. $1050.10

C. $1,094.16

D. $1,111.51

E. None of the above

12. A bond that sells for more than its par value is called a bond.

A. municipal

B. premium

C. investment grade

D. CCC-rated

E. discount

13. Which of the following statements is incorrect?

A. When interest rates rise, bond prices fall.

B. Long term bonds are riskier than short term bonds, holding everything else constant.

C. A convertible bond can be converted into a specified number of common shares of the issuer before the bond expires.

D. A callable bond gives the holder the option to lend additional amounts to the borrower.

E. All of the above are true.

14. Giggle Inc.has two bonds outstanding, A and B. Both bonds have a par value of $1,000, and a coupon rate of 2%. Bond A has a remaining life of 1 year and Bond B has a life of 15 years. If the rate of interest on similar bonds were to rise, which of the following would happen:

A. The value of Bond A will rise but the value of Bond B will fall.

B. The value of Bond B will rise but the value of Bond A will fall.

C. Both bonds will sell at their par values.

D. The value of Bond A will fall more than the value of Bond B.

E. None of the above.