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1. What amount comes closest to the present value of an annuity of 10 consecutive annual payments of $10 that begin at the end of the first year with one exception: there is no payment at the end of year 5 (and only in that particular year)? Use an interest rate of 4%

a. $72.89 b. 69.38, c. $66.13, d. $63.11, e. $69.96

2. Holding all else equal, the premium of a call option on common stock will increase if:

I. The price of the underlying goes up

II. The volatility of the underlying goes up

III. The time to expiration gets shorter

a. Only I is true b. Only II is true c. Only III is true d. Only I and II are true e. I, II, and III are true

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92073905

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