6. The formula for computing the present value of a future cash flow is: 7. The formula for computing the future value of a present cash flow (for instance a bank deposit or a CD) is: 8. The risk-free interest rate for any time period is the Corporate bond rate for the period U.S. treasury rate for the period High yield benchmark rate for the period High grade benchmark rate for the period 9. The interest rate on a 5 year bond issued by a corporation will include: The current market interest rate on a 5 year U.S. treasury bond A premium for credit risk A premiuim for liquidy risk All of the above 10. The coupon rate on a U.S. treasury note or bond is An annual interest rate A semi-annual interest rate A quarterly interest rate None of the above C. 11. Understanding how to compute the present value of future cash flows is critical in finance because: Bond investors compute the present value of bond cash flows Stock investors compute the present value of dividend cash flows Corporations compute the present value of cash flows from projects and equipment All of the above C. 12. If the current UST2 market interest rate is higher than the coupon rate on a bond that matures in 2 years: the current price of the bond will be less than the bond's face (par) value the current price of the bond will be the same as the bond's face (par) value the current price will be more than the bond's face Xpar) value none of the above C. 13. If the interest rate on credit card balances is 15%, but the interest charges compound daily, the number of periods that will be used in the future value formula will be: 12 365 183 14, what is the formula for computing the future value of a 4 year that pays 3% and compounds quarterly? FV PV (1+03)A4 FV PV (1+015)A8 FV PV 1+0075)16 FV PV/(1+.0075)A8 C