1) You are using both the payback and NPV decision rules. The payback threshold is 2 years. If a project has a payback of 5 years and an NPV of $1,000,000,000 then payback will say _______ the project and NPV will say _________ the project.

__________accept; accept

__________accept; reject

__________reject; accept

__________reject; reject

2) If a 10-year bond has a 8% coupon rate, and a 12% yield-to-maturity, then the bond's price is:

______less than par

_______equal to par

_______greater than par

3) If we assume the dividends for a stock grow forever at a constant rate, then we are also assuming:

__________the stock's price grows faster than the dividends.

__________the stock's price grows slower than the dividends.

__________the stock's price grows at the same rate as the dividends.

4) A project's cash flows are conventional. The required return is 17%. The project's NPV > 0. Therefore the project's:

___________IRR < 0.

___________IRR < 17%.

___________ IRR = 17%.

____________IRR > 17%.