1. Which of the following statements are true about when issued trading?

A) It takes place before an auction

B) It provides an efficient means of price discovery

C) It is a forward contract

D) All of the above

2. Project S costs $19,000 and it's expected cash flows would be $6500 per year for 5 years. Mutually exclusive Project L costs $42,500 and it's expected cash flows would be $13,200 per year for 5 years. If both projects have a WACC of 15%, which project would you recommend?

a. Project L, since NPVL > NPVs

b. Both projects S and L, since both projects have IRR's > 0.

c. Both projects S and L, since both projects have NPVs > 0.

d. Project S, since the NPVs > NPVL

e. Neither project S nor L, since each project NPV < 0.

3. SHOW CLEAR WORK ON EXCEL

A fully amortizing mortgage is made for $80,000 for 25 years. Total monthly payments will be $900 per month. What is the interest rate on the loan?