a European-style bond Question 13 1 p When considering the fundamental equation of Chapter Five, which of the following statements are NOT true if else is equal? Select one or more correct answers. Ift decreases, PV increases If FV increases, PV decreases Ifr increases, FV increases If PV increases, r decreases Ift decreases, FV increases Ifr decreases, PV increases Ift decreases, r decreases Question 14 Agency costs refer to Suard DIFPV increases, decreases Ort decreases, FV increases Ir decreases, PV increases Olt decreases, decreases Question 14 Agency costs refer to Select the single best answer. O corporate income subject to double taxation O None of these choices is the single best answer. O the total dividends paid to stockholders over the lifetime of a firm o the unlimited liability that exists within a partnership the costs that result from default and bankruptcy of a firm the total interest paid to creditors over the lifetime of the form O the costs of any conflicts of interest between stockholders and management Question 15 Which of the following statements related to annuities and perpetuities are correct? k Browser Guard yoran o the total interest paid to creditors over the lifetime of the form the costs of any conflicts of interest between stockholders and management Question 15 1 pts Which of the following statements related to annuities and perpetuities are correct? Select one or more correct answers. Most loans are a form of perpetuity. The present value of a perpetuity cannot be computed, but the future value can. None of these statements is true. Perpetuities are finite, but annuities are not. A perpetuity comprised of $250 monthly payments is worth more than an annuity comprised of $250 monthly payments, given an interest rate of 11% APR, compounded monthly. An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 6% compounded annually. Question 16 1 Bob has $500 today. Which of the following statements are correct if he invests this money at a positive rate of interest for five years elect one or more correct answers. U None of these statements is true. Perpetuities are finite, but annuities are not A perpetuity comprised of $250 monthly payments is worth more than an annuity comprised of $250 monthly payments, given an interest rate of 11% APR, compounded monthly An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 6% compounded annually. Question 16 1 pts Bob has $500 today. Which of the following statements are correct if he invests this money at a positive rate of interest for five years? Select one or more correct answers. If he can earn 7% per year, he will have to wait approximately six years to have $1,000 total. None of these statements is correct. At the end of the five years he will have less money if he invests at 5% EAR rather than at 7% EAR. The higher the interest rate he earns, the less money he will have in the future. The lower the interest rate, the longer he has to wait for his money to grow to $1,000 in value. At 10% interest per year, he should expect to wait approximately five years to double his money. Question 17 Which of the following statements concerning hond prices are true? Have less money if he invests at 5% EAR rather than at 7% EAR. The higher the interest rate he earns, the less money he will have in the future. The lower the interest rate, the longer he has to wait for his money to grow to $1.000 in value. At 10% interest per year, he should expect to wait approximately five years to double his money. Question 17 1 Which of the following statements concerning bond prices are true? Select one or more correct answers. The price of a short-term bond is more sensitive to interest rate changes than the price of a long-term bond, all else equal. Bond prices tend to fluctuate less as the time to maturity gets longer. All else equal, a 12% coupon rate bond will sell at a higher price than a 10% coupon rate bond. Movements in bond prices are positively related to movements in the market rate of interest. The price of a zero-coupon bond cannot be less than its face value. None of these choices is true about bond prices. Question 18 Cuard nents in the market rate of interest. The price of a zero-coupon bond cannot be less than its face value. None of these choices is true about bond prices. Question 18 1 pts Which one of the following compounding periods will yield the smallest present value given a stated future value and annual percentage rate? Select the single best answer. O continuous O annual None of these choices is the single best answer. O monthly daily O semi-annual Question 19 semi-annual Question 19 1 pts Which of the following statements concerning interest rates are correct? Select one or more correct answers. All else equal, savers would prefer annual compounding over monthly compounding. For any positive rate of interest, the effective annual rate will always exceed the annual percentage rate. By law, the effective annual rate must be contained in a loan contract. All else equal, borrowers would prefer monthly compounding over annual compounding. The effective annual rate decreases as the number of compounding periods per year increases. The effective annual rate equals the annual percentage rate when interest is compounded annually. None of these statements is correct. For loans that compound interest more frequently than once per year, the EAR is greater than the APY which is greater than the APR. Question 20 nard Julele equal, borrowers would prefer monthly compounding over annual compounding The effective annual rate decreases as the number of compounding periods per year increases. The effective annual rate equals the annual percentage rate when interest is compounded annually. O None of these statements is correct. For loans that compound interest more frequently than once per year, the EAR greater than the APY which is greater than the APR. Question 20 1 pts Assume everything is exactly the same except one stream of cash flows is an ordinary annuity and the other is a perpetuity. Which of the following comparison statements are true? Select one or more correct answers. All else equal, the present value of the perpetuity is greater than that of annuity. Both an annuity and a perpetuity have equal payments. An annuity has equal payments, a perpetuity does not. For both the annuity and perpetuity, if the payment amount increases the present value decreases. An annuity covers a longer period of time than a perpetuity. Both the present value of an annuity and perpetuity formulae require a constant rate of return. Question 21 mrd a European-style bond Question 13 1 p When considering the fundamental equation of Chapter Five, which of the following statements are NOT true if else is equal? Select one or more correct answers. Ift decreases, PV increases If FV increases, PV decreases Ifr increases, FV increases If PV increases, r decreases Ift decreases, FV increases Ifr decreases, PV increases Ift decreases, r decreases Question 14 Agency costs refer to Suard DIFPV increases, decreases Ort decreases, FV increases Ir decreases, PV increases Olt decreases, decreases Question 14 Agency costs refer to Select the single best answer. O corporate income subject to double taxation O None of these choices is the single best answer. O the total dividends paid to stockholders over the lifetime of a firm o the unlimited liability that exists within a partnership the costs that result from default and bankruptcy of a firm the total interest paid to creditors over the lifetime of the form O the costs of any conflicts of interest between stockholders and management Question 15 Which of the following statements related to annuities and perpetuities are correct? k Browser Guard yoran o the total interest paid to creditors over the lifetime of the form the costs of any conflicts of interest between stockholders and management Question 15 1 pts Which of the following statements related to annuities and perpetuities are correct? Select one or more correct answers. Most loans are a form of perpetuity. The present value of a perpetuity cannot be computed, but the future value can. None of these statements is true. Perpetuities are finite, but annuities are not. A perpetuity comprised of $250 monthly payments is worth more than an annuity comprised of $250 monthly payments, given an interest rate of 11% APR, compounded monthly. An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 6% compounded annually. Question 16 1 Bob has $500 today. Which of the following statements are correct if he invests this money at a positive rate of interest for five years elect one or more correct answers. U None of these statements is true. Perpetuities are finite, but annuities are not A perpetuity comprised of $250 monthly payments is worth more than an annuity comprised of $250 monthly payments, given an interest rate of 11% APR, compounded monthly An ordinary annuity is worth more than an annuity due given equal annual cash flows for ten years at 6% compounded annually. Question 16 1 pts Bob has $500 today. Which of the following statements are correct if he invests this money at a positive rate of interest for five years? Select one or more correct answers. If he can earn 7% per year, he will have to wait approximately six years to have $1,000 total. None of these statements is correct. At the end of the five years he will have less money if he invests at 5% EAR rather than at 7% EAR. The higher the interest rate he earns, the less money he will have in the future. The lower the interest rate, the longer he has to wait for his money to grow to $1,000 in value. At 10% interest per year, he should expect to wait approximately five years to double his money. Question 17 Which of the following statements concerning hond prices are true? Have less money if he invests at 5% EAR rather than at 7% EAR. The higher the interest rate he earns, the less money he will have in the future. The lower the interest rate, the longer he has to wait for his money to grow to $1.000 in value. At 10% interest per year, he should expect to wait approximately five years to double his money. Question 17 1 Which of the following statements concerning bond prices are true? Select one or more correct answers. The price of a short-term bond is more sensitive to interest rate changes than the price of a long-term bond, all else equal. Bond prices tend to fluctuate less as the time to maturity gets longer. All else equal, a 12% coupon rate bond will sell at a higher price than a 10% coupon rate bond. Movements in bond prices are positively related to movements in the market rate of interest. The price of a zero-coupon bond cannot be less than its face value. None of these choices is true about bond prices. Question 18 Cuard nents in the market rate of interest. The price of a zero-coupon bond cannot be less than its face value. None of these choices is true about bond prices. Question 18 1 pts Which one of the following compounding periods will yield the smallest present value given a stated future value and annual percentage rate? Select the single best answer. O continuous O annual None of these choices is the single best answer. O monthly daily O semi-annual Question 19 semi-annual Question 19 1 pts Which of the following statements concerning interest rates are correct? Select one or more correct answers. All else equal, savers would prefer annual compounding over monthly compounding. For any positive rate of interest, the effective annual rate will always exceed the annual percentage rate. By law, the effective annual rate must be contained in a loan contract. All else equal, borrowers would prefer monthly compounding over annual compounding. The effective annual rate decreases as the number of compounding periods per year increases. The effective annual rate equals the annual percentage rate when interest is compounded annually. None of these statements is correct. For loans that compound interest more frequently than once per year, the EAR is greater than the APY which is greater than the APR. Question 20 nard Julele equal, borrowers would prefer monthly compounding over annual compounding The effective annual rate decreases as the number of compounding periods per year increases. The effective annual rate equals the annual percentage rate when interest is compounded annually. O None of these statements is correct. For loans that compound interest more frequently than once per year, the EAR greater than the APY which is greater than the APR. Question 20 1 pts Assume everything is exactly the same except one stream of cash flows is an ordinary annuity and the other is a perpetuity. Which of the following comparison statements are true? Select one or more correct answers. All else equal, the present value of the perpetuity is greater than that of annuity. Both an annuity and a perpetuity have equal payments. An annuity has equal payments, a perpetuity does not. For both the annuity and perpetuity, if the payment amount increases the present value decreases. An annuity covers a longer period of time than a perpetuity. Both the present value of an annuity and perpetuity formulae require a constant rate of return. Question 21 mrd