Problem 1. Indicate whether the following statement is true or false (35 marks) 1. If money is invested for 20 years at 12% interest, compounded monthly, the money is really being invested fe 240 month periods, during which 1% interest is received each period. a. True b. False 2. Rent is a good example of an ordinary annuity. a. True b. False 3. The more frequent the compounding periods in a year, the lower the future value. 2. True b. False 4. Foreign bonds are bonds exclusively issued by foreign governments. a. True b. False 5. Bonds work so well because they enable lenders to raise more funds. a. True b. False 6. The present value is negatively related to the interest rate. a. True b. False 7. A coupon payment is defined as a percentage of the face value. a. True b. False 8. As the compound interest rate increases, the present value of future cash flows increases. a. True b. False 9. Corporate bonds bear a higher default risk compared to government bonds. a. True b. False 10. The higher the yield to maturity is the higher the price of the bond today a True b. False