ULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 4 points ach. 1) Aurand, Inc. has outstanding bonds with an 8 % annual coupon paid semiannually. The bonds have a par value of $1,000, a current price of $904, and will mature in 14 years. What is the yield to maturity on the bond? 1) A) 10.47% B) 7.90% C) 924% D) 15.80% 2) You have invested in aproject that has the following payoff schedule Payoff Probability of Occurrence 15 $40 $50 20 $60 30 $70 30 $80 05 What is the expected value of the investment's payoff? (Round to the nearest $1.) A) $70 B) $55 C) $60 D) $65 3) You are going to invest in one of three projects with the following distribution of possible returns Project 1 Probability 3) Project 3 Probability Retum 10% Chance 30% Project 2 Probability 30 % Chance Return Return 30 % 20% 50% Chance 50% Chance 40% Chance 15% 40% Chance 10 % 10% Chance -21% 10% 40% Chance -4% -20 % 30% Chance If you are a risk-averse investor, which one should you choose? C) Project 3 D) Project 2 B) Project 1 A) Cannot decide 4) Managerial options serve to A) limit the range of capital investments available to a firm. B) limit management's ability to change a previous decision. C) reduce the potential conflict between owners and managers D) limit the downside risk of an investment project. 5) Stock A has a beta of 1.4 and a standard deviation of returns of 12 %. Stock B has a beta of 1.1 and a standard deviation of returns of 12%. If the market risk premium increases, then: 51 A) the required retum on stock A will increase more than the required retum on stock B. B) the required returns on stocks A and B will remain the same. return on stock A C) the required returns on stocks A and B will both increase by the same amount. D) the required return on stock B will increase more than the required