25) Given the NPV of project 1 as 20,000 and project 2 as 10,000, if the projects are said to be mutually exclusive which project(s) will you accept? A) Project 2 because it has the lower cost as measured by the net present value B) Project 1 because it has the greater net present value C) Both projects because they have positive net present values D) We cannot decide as the information given is not sufficient, for instance the risk-free rate 26) Given the NPV of project 1 as 10,000 and project 2 as 20,000, if the projects are said to be independent which project(s) will you accept? A) Both project 1 and 2 because they have positive net present value B) Project 2 because it has the greater net present value C) Project 1 because it has the lower cost as measured by the net present value D) None 27) The return of the asset j by CAPM is Rj = 0.000518 + 1.5Rmt. Suppose that the market return increases by 11%, what is the expected return? A) The return of j will increase by 16.5% B) The return ofj is expected on average to increase by 16.5% C) The return of j is expected to increase by 0.0518% D) The return ofj is expected to increase by 11% 28) The return of the asset j by CAPM is Ri= 0.000518 + 1.5Rmt. Suppose that the market return increases by 11%, what is the expected return if the market for security jis efficient? A) 11% B) 16.5% C) 5.5 D) Higher than 16.5% 29). The value of a bond is also called its face value. Bonds which sell at less than face value are priced at a while bonds which sell at greater than face value sell at a A) par; premium; discount B) discount; par; premium C) premium; discount; par D) coupon; premium; discount E) par; discount; premium 30) Calculate the price of a 1-year bond paying coupon rate 10% semi-annually with a YTM 8% and face value $100. A) $94 B) $94.30 C) $101.88 D) $94.65