1. The real interest rate is the change in the number of dollars you have.

____________ True

_____________False

2) You calculated the NPV for a solar power project and it is negative. However accepting the solar power project will give you the option to build a factory. The NPV of the combined solar power and factory project is positive. You should accept the combined project.

____________ True

____________False

3) You can attempt to increase the NPV of a project by considering the options to expand or abandon the project. There also may be strategic options.

________True

________False

4) Sometimes, the option to abandon or expand could reduce the project's NPV. Similarly some strategic options may reduce the project's NPV.

_________True

_________False

5) The relationship between a bond's price and yield is linear.

_________True

_________ False