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NEW QUESTION: 1
An analyst is developing net present value (NPV) profiles for two investment projects. The only difference between the two projects is that Project 1 is expected to receive larger cash flows early in the life of the project, while Project 2 is expected to receive larger cash flows late in the life of the project. The slope of the NPV profile for Project 1 when compared to the slope of the NPV profile for Project 2 is most likely:
A. Steeper
B. Unequal
C. Equal
D. Flatter
Answer: D
NEW QUESTION: 2
A coupon bond with duration of 4.75 has an initial price of par value. A 50 basis point decrease in required return would cause the price of $2,000,000 par value of this bond to:
A. decrease to $1,952,250
B. increase to $2,047,500
C. increase to $2,095,000
Answer: B
Explanation:
New price = (1 + .0475/2) x $2,000,000 = $2,047,500
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