3.) The future value of a future sum increases as the interest rate per yearincreases, other things held constant. (15points)a. Ture b. False

4.) You have a 2-year zero percent interest rate car loan for $1,000. Suppose that you have two options: 1) pay nothing at year 1 & $1,000 at year 2 or 2) pay $500 at year 1 and $500 at year 2. You would be better off when you choose options 2). (15points)a. Ture b. False

6.) Given the discount rate of 10 percent, the present value of a 10-year annuity that pays $1,000 per year is greater than $6,000. (15points)a. Ture b. False

7.) Two firms issue a 5-year bond with a coupon rate of 12% and a par value of $1,000. Firm A pays coupon annually while Firm B pays coupon semiannually. Given a discount rate of 10%, the bond price is greater for Firm B than Firm A. (15points)a. Ture b. False

8.) U.S. Treasury sells you a bond for $900. It has no payments until the bond matures 5 years from now, at which time it will be redeemed for $1,000. Then, the discount rateis less than 5%. (15points)a.Ture b. False

9.) As the market interest rate decreases, the bond price will decrease. (15points)a. Ture b. False

10.) When the yield to maturity is 8% and the coupon rate is 10%, this bond is a premium bond. (15points)a. Ture b. False