1. The fair value of a financial instrument is the future value of its cash flows

   True

   False

2. The formula for value of a bond is,

   B₀ =( I/r)* (1 1/(1+r)ⁿ ) - M/(1+r)ⁿ

   r refers to the discount rate

   True

   False

3. If discount rate is equal to coupon rate, a bond is called discount bond

   True

   False

4. A par bond's fair value is equal to it's maturity value

   True

   False

5. According to the Gordon Model, the value of a common stock is the future value of expected dividends

   True

   False