When would the calculation of the effective annual interest rate be most useful?

	a.	When comparing two investments that compound differently within a year
	b.	When comparing two investments that have different inherent risk
	c.	When comparing two investments that end at different points in time
	d.	When comparing two investments with different par values
	e.	When comparing two investments with different annuity amounts

4 points

QUESTION 23

In the story of New England Wire and Cable, the company was in an unusual situation of being worth more dead than alive. What economic principle was violated when Larry Garfield tried to get control of the firm, break it up, sell the assets, and make a profit?

	a.	The law of one price
	b.	Externalities
	c.	Non-positive marginal utility of wealth
	d.	Diminishing marginal return
	e.	Diminishing marginal utility of wealth

Suppose that Firm ABC has a bond trading with 8 years remaining till maturity and with a coupon rate of 5%. The bond will return its face value of $1,000 at maturity. Suppose that the bond