1 All other parameters held constant, as the spread between the yield and the coupon rate on a bond decreases, the price of the bond A falls further below par B rises further above par C gets closer to par D approaches infinity 2 If the net present value of a project is negative, then A the discount rate used for the future expected cash flows is less than the internal rate of return for the project B the discount rate used for the future expected cash flows is incorrect C the discount rate used for the future expected cash flows is greater than the internal rate of return for the project D the discount rate used for the future expected cash flows is equal to the internal rate of return for the project 3 The net present value of a project has been found to be $0 The internal rate of return on the project is 9 6 If a discount rate of 7 0 had been used instead to determine the net present value, then A The project would have been accepted B The internal rate of return would have changed C The net present value would have stayed the same D The project would have been rejected

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Question: 1. All other parameters held constant, as the spread between the yield and the coupon rate on a bond decreases, the price of the bond

1. All other parameters held constant, as the spread between the yield and the coupon rate on a bond decreases, the price of the bond

A. falls further below par.
B. rises further above par.
C. gets closer to par.
D. approaches infinity.

2. If the net present value of a project is negative, then

A. the discount rate used for the future expected cash flows is less than the internal rate of return for the project.
B. the discount rate used for the future expected cash flows is incorrect.
C. the discount rate used for the future expected cash flows is greater than the internal rate of return for the project.
D. the discount rate used for the future expected cash flows is equal to the internal rate of return for the project.

3. The net present value of a project has been found to be $0. The internal rate of return on the project is 9.6%. If a discount rate of 7.0% had been used instead to determine the net present value, then

A. The project would have been accepted.
B. The internal rate of return would have changed.
C. The net present value would have stayed the same.
D. The project would have been rejected.

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