State whether the following statements are true or false and comment on both (10 marks): 1. When comparing loans of equal amounts and equal time periods, you should select the loan that has the lowest quoted rate. 2. Scott borrowed $1,800 today. The loan agreement requires him to repay $2,120 in one lump sum payment one year from now. This type of loan is referred to as pure-discount loan. 3. A call provision in a bond agreement grants the issuer the right to buy back the bonds on the open market prior to maturity. 4. The primary purpose of bond covenants is to protect the lender. 5. The dividend growth rate is referred to as the market rate. 6. The security that represents the residual ownership of a firm and has no priority in bankruptcy is called callable bond. 7. Julie owns a stock with a market price of $43 per share. This stock pays a constant annual dividend of $1.34 a share. If the price of the stock suddenly falls to $31 a share, you would expect the capital gain yield to fall. 8. If by accepting one investment you eliminate the option of another investment, you are dealing with conventional cashflows. 9. Payback is the preferred method of analyzing a proposed investment 10. The lowest rating a bond can receive from Standard & Poor's and still be classified as investment grade is Baa