The Treasury yield curve plots the yields on Treasury notes and bonds relative to the ____ of those securities.

face value

par value

maturity

coupon rate

Victoria Tennis is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Project 1 will produce annual cash flows of $52,000 a year for six years. Project 2 will produce cash flows of $48,000 a year for eight years. The company requires a 15 percent rate of return. Which project should the company select and why?

Project 1, because the annual cash flows are greater than those of Project 2

Project 1, because the present value of its cash inflows exceeds those of Project 2 by $14,211.62

Project 2, because the total cash inflows are $70,000 greater than those of Project 1

Project 2, because the present value of the cash inflows exceeds those of Project 1 by $18,598.33

It does not matter as both projects have almost identical present values.

1. What is the expected return on a stock that pays a 4 percent annual dividend and whose price is expected to appreciate annually at 6 percent?

7 %

8 %

9 5

10 %

A bond with a face value of $1,000 has annual coupon payments of $100. The bond currently sells for $1,000 and has 8 years to maturity. This bond's yield to maturity is:

		10 %
		less than 10 %
		more than 10 %
		none of the above