What is the value of a U.S. Treasury bond maturing in 8 years with a $1,000 face value and a 7% coupon to an investor who requires a 7% rate of return?

	A.	$ 417.99.
	B.	$ 582.01.
	C.	$1,000.00.
	D.	$1,417.99.

2.

The required rate of return of professional investors:

	A.	Is higher than the required rate of return of non-professional investors.
	B.	Does not enter the cost of capital calculation.
	C.	Can be determined by asking them.
	D.	Is impossible to determine.

3.

Cash flows are used instead of accrual accounting numbers in capital budgeting for all the following reasons except:

	A.	Financial value comes from cash flows.
	B.	Accrual accounting numbers match revenues and expenses with economic events
	C.	There are alternative accounting treatments for some events.
	D.	GAAP rules are made by people and can change.