True or False and Multiple Choice (writing the calculation may earn you partial credit) 1. NYSE is a primary market. 2. Other variables held constant, there is an inverse relation between bond prices and interest rates. 3. Other variables held constant, there is an inverse relation between stock prices and interest rates. 4. In capital budgeting, one project could solve to have multiple IRRs. 5. When paying cash dividend, the firm's stock price, will as a result drop by the cash amount. 6. By DDM, if a company never ever pays any cash dividend in the future, its stock should be worth zero. 7. The fact that such companies as Google, Amazon never paid any dividend but still have value conflicts with DDM. 8. Stock price computed in DDM is ex-dividend price, meaning the price right before firm is about to pay a dividend. 9. The fact that equity holders are last in line -called residual claimant, curbs the incentives for business innovation. 10. There're two ways to compute current stock price, by discounting EITHER 1) all future expected dividends, OR 2) future expected dividends plus an expected terminal cashflow (when selling the stock). Both are consistent with DDM