Answer the following statements true (T) or false (F)
1) The present value of a bond is the only price that buyers are willing to spend on the bond and the only price sellers are willing to accept for the bond.
2) Junk bonds sell for higher prices than non-junk bonds.
3) The present value of a bond is the only price that buyers are willing to spend on the bond and the only price sellers are willing to acce244) A profit-maximizing manager should always calculate the net present value and use the net present value rule to evaluate any business decision that involves the payment or receipt of money at different times in the future.pt for the bond.
4) Profit-maximizing managers should make efforts to receive profits in future and incur costs in the present.
5) Interest paid of debt-financed investments is referred to as a tax shield.
1) TRUE
2) FALSE
3) TRUE
4) FALSE
5) TRUE
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A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. This is an example of
A) cyclical unemployment. B) frictional unemployment. C) seasonal unemployment. D) structural unemployment.
Asymmetric information increases the economic value that an agreement between two parties creates
Indicate whether the statement is true or false