m ult el auve that best completes the statement or answers 1. You own a bond that has a 7 percent coupon and matures in 12 years. You purchased this bond at par value when it was originally issued. If the current market rate for this type and quality of bond is 7.5 percent, then you would expect: a. the bond issuer to increase the amount of each interest payment on these bonds. b. to realize a capital loss if you sold the bond at the market price today. c. today's market price to exceed the face value of the bond. d. the current yield today to be less than 7 percent. All else constant, as the market price of a bond increases the current yield_ and the yield to maturity a. increases; decreases. b. remains constant; increases. C. decreases; increases. d. decreases; decreases. ! 3. The stock valuation model that determines the current stock price by dividing the next annual dividend amount by the discount rate less the dividend growth rate is called the_ model. a. zero growth b. dividend growth C. capital pricing d. discounted dividend 4. An investment is acceptable if the profitability index (PI) of the investment is: a. greater than one. b. less than one. c. less than the net present value (NPV). d. greater than a pre-specified rate of return. 5. The internal rate of return for a project will increase if: a. the total amount of the cash inflows is reduced. b. each cash inflow is moved such that it occurs one year later than originally projecte c. the required rate of return is reduced. d. the initial cost of the project can be reduced. 6. Which one of the following is the best example of two mutually exclusive projects? a. using an empty warehouse for storage or renting it entirely out to another firm b. planning to build a warehouse and a retail outlet side by side C. buying sufficient equipment to manufacture both desks and chairs simultaneou d. buying both inventory and fixed assets using funds from the same bond issue