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1. The formula for calculating the present value (PV) of a perpetuity is PV = PP/(1 + i), where PP is the perpetuity payment and i is the discount rate. a. true b. False

2. Common stock represents ownership of the firm. a. true b. False

3. A mortgage bond is secured by a lien on real property. a. true b. False

4. Par value is the present value of all future cash flows due to be received from a bond. a. true b. False

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