1. Morin Company's bonds mature in 8 years, have a par value of $1,000, and make an annual coupon interest payment of $65. The market requires an interest rate of 7.5% on these bonds. What is the bond's price? A. $941.43 B. $1,016.74 C. $706.07 D. $1,054.40 E. $828.46 23. Sadik Inc.'s bonds currently sell for $1,120 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,100. What is their yield to call (YTC)?
A. 8.80% B. 9.80% C. 11.16% D. 7.35% E. 9.08%
2. True or False
A decrease in interest rates decreases the net present value of an investment.
3. True or False
The internal rate of return assumes that cash flows are reinvested at the firm’s cost of capital.