Business Finance NO KEYS Summer 2020 - Compatibility Mode - Saved to my Mac Mailings Review View Tell me ces EEE 21 A A AalbCeDdl AalbCcDd6 A) Aalbcd A) Heading 1 Heading 2 Heading 3 Her Emphasis a. 11. How much would $5,000 due in 25 years be worth today if the discount rate were 5.5%? Assume annual interest compounding. $1,067.95 b. $1,124.16 c. $1,183.33 d. $1,245.61 e. $1,311.17 12. Suppose the U.S. Treasury offers to sell you a bond for $747.25. No payments will be made until the bond matures 5 years from now, at which time it will be redeemed for $1,000. What interest rate would you earn if you bought this bond at the offer price? Assume annual interest compounding 4.37% a. b. c. d. e. 4.86% 5.40% 6.00% 6.60% c. 13. Which of the following statements is CORRECT, other things held constant? If companies have fewer good investment opportunities, interest rates are likely to increase. b. If expected inflation increases, interest rates are likely to increase. Interest rates on all debt securities tend to rise during recessions because recessions increase the possibility of bankruptcy, hence the riskiness of all debt securities. Interest rates on long-term bonds are less volatile than rates on short-term debt securities like T-bills. 14. A price-linked derivative security pays $300 if the oil price over the next year increases by more than 594 an auant that can hannan with 60% mohabilitu. Atharuia itnaue C501 the axnastad Focus d. PS