10. Debentures are examples secured long-term debt.*

1

True

False

11. An asset is expected to generate a free cash flow of $10,000 per year for five years. If the required discount rate is 15%, what is the asset worth in the market?*

2

33,521.55

43,294.77

67,043.1

None of the above

12. You are analyzing a corporate bond with the following characteristics. It has a $1,000 face value, five years to maturity, carries a 6% coupon (paid annually) and has a yield to maturity of 7%. What is the market price of the bond?*

3

959

1000

1042.12

None of the above

13. You are analyzing a corporate bond with the following characteristics. It has a $20,000 face value, three years to maturity, carries a 2% coupon (paid annually) and has a yield to maturity of 4%. What is the market price of the bond? Use Present Value Interest Factor Tables in solving this question.*

3

18,890.04

19,256.84

55,857.6