Which of the following is true regarding interest rates?

The effect of a change in interest rates on bond and stock prices is unknown.

Interest rates do not affect stock or bond prices.

Decreases in interest rates lead to decreases in bond prices.

Decreases in interest rates lead to increases in bond prices.

Decreases in interest rates lead to decreases in stock prices.

Your friend wants to borrow $10,000 from you and gives you three options for repayment. Assuming a discount rate of 5%, which of the following options should you choose?

Option A: $12,000 lump sum paid 4 years from now

Option B: $11,500 lump sum paid 3 years from now

Option C: $1,000 a year for the next 10 years

You should not lend the money because all options are negative NPV investments

You are indifferent because they all have the same net present value

Option C because it is the highest net present value

Option B because it is the highest net present value

Option A because it is the highest net present value