Question: If the process of coming back to present value (PV) from future cash flows is called discounting, then the process of going to future value

  1. If the process of coming back to present value (PV) from future cash flows is called discounting, then the process of going to future value (FV) from present value (PV) is called compounding. (TRUE/FALSE)?_______________________
  2. For a corporate bond, the quoted interest rate minus the real risk-free rate is equal to which of the following?
    1. Nominal interest rate
    2. Real inflation rate plus nominal interest rate
    3. Market risk premium
    4. The sum of inflation premium, default risk premium, liquidity premium and maturity risk premium

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