Question

Please solve True and falses

1. If the yield to maturity of a bond is less than the bond's coupon rate, then the bond will sell at a discount a. True b. False 2. Bondholders face interest rate risk because as interest rates increase, bond prices decrease. a. True Bob. False that the thou 3. Stark Industries purchased a new arc reactor two years ago at a cost of $1,739,000.00. Last year, the government changed the emission requirement and this reactor cannot meet those standards. Stark Industries' can no longer use the reactor nor have they been able to find someone who can use it. Given this, the reactor is considered an opportunity cost. a. True b. Falsering project von 4. All else equal, the lower the coupon rate of a bond, the greater then interest rate risk. a. True b. False 5. Scenario analysis is the investigation of what happens to NPV when only one variable is changed. a. True b. False 6. An example of a terminal cash flow is the sale of the machine when the project is over. a. True b. False 7. Research and development costs are typically included as part of the initial investment in a project. a. True b. False 8. Cash flows associated with a sunk cost are relevant when making a capital budgeting decision a. True b. False 9. Sensitivity analysis is a subset of scenario analysis in which we look at the impact of a change in a specific variable on the project's NPV. a. True b. False

Answer 1

1.
False, sell at premium

2.
True

3.
False, a sunk cost

4.
True

5.
False, when multiple variables are changed

6.
True

7.
False, sunk costs

8.
False, not relevant

9.
True