When the market price is higher than the face value, the bond is traded at a Par

In NPV method cash flow estimation might be difficult because of uncertainty

Face value is called Par value

Pure Discount Bonds do not carry an___________ interest rate Explicit

A bond may be redeemed at All of the above

When choosing among___________ projects, the project with the largest (positive) NPV should be
selected Mutually exclusive

What are the features of the investment decision? All of the above f

The rate of interest is fixed at the IRR based on 124

Price of the bond =P = C1 /(1+r) + C2/(1+r)2

The maturity value of a recurring deposit is

future value of an annuity

NPV takes into account the Opportunity cost of capital

The relationship between NPV and IRR is NPV (IRR (values), values) = 0

NPV functions returns the net present value of an investment based on discount rate and series of
future payments and incomes true

The project can be accepted if Net Present Value is positive or zero true

IRR Stands for Internal rate of return

A long term debt instrument with a fixed rate of interest is a Bond

Bonds can be issued by government only false

What is paid on the face value Interest

IRR is the interest rate received for an investment consisting of payments (negative values) and income
(positive values) that occur at regular periods TRUE

When the yield is less than the coupon rate, price of bond decreases false

FV of an annuity =FV= A [ (1+r)n-1]/2

Bonds issued by Public sector companies are considered risk free and secure true

The actual rate of return earned on an investment is called Yield

Future value of an investment is the___________ value that an investor would receive at the end of the
specified period of investment Maturity

In NPV method cash flow estimation might be difficult because of uncertainty

NPV can be used to select between mutually exclusive projects true

Rate of interest which equates discounted value of cash flows to the current market price Pure discount
bond

Mathematical formula for Present value PV = FV1/ (1+r) + FV 2/ (1+r)2 + FV3 /(1+r)3

In Independent project both NPV and IRR will always give the Same

Bonds issued by the___________ are considered risk free and secure Government

IRR helps the organization to determine how well a project will perform under___________ interest
rates Varied

Price and yield are___________ related Inversely

Cash flows= Annual interest +Maturity value

The IRR decision rule specifies that all independent projects with an IRR greater than the cost of capital
should be accepted If IRR greater than cost of capital, Yes

Net Present Value Method is a _________ cash flow technique for making investment decisions
Discounted

Present value can be calculated using ___________ excel function NPV

The interest rates account for the time value of money, irrespective of an individual`s preference or
attitudesTRUE

Present values are___________ than the corresponding future value Smaller

What are all features appeared in bond 134

A bond may be traded in a stock exchange. The price at which it is currently sold or bought is called
Market value

What are the variables that need to be considered in the assets business for a bank to make the profit
ALL

The value that a bondholder will get on maturity is the Redemption value

Coupon rate is otherwise known as Interest rate

Current Yield can be calculated as Current yield = coupon/market price * 100

Repayment of principal every year is Amortisation

The present value of the future cash flows is determined using the Discount rate

IRR technique is useful when rescheduling Investment

IRR can be found using Excel YES

NPV stands for Net present value

When the yield is higher than the coupon rate, price of bond Decreases

When choosing among mutually exclusive projects ,project with the highest IRR should be chosen true

If the NPV of a prospective project is positive It should be accepted

Price of the bond is arrived at by calculating the___________ value of the future cash flows Present

In amortisation principal will___________with annual payments and interest will be calculated on the
Declines, outstanding amount

YTM is the The bond`s internal rate of return

IRR is the rate of discount, when applied to a series of cash flows, makes the NPV of the cash flows to
Zero

YTM Stands for Yield to maturity

If the IRR of the loan is equal to or higher than the desired IRR, the loan is Profitable

Pure discount bonds are called Both a and b.

When will the bond trade at a discount? When the YTM is lesser than the coupon rate

By using future value of annuity method if Rs.1000 is deposited at the end of each year for three years
@ 10 % p.a What is the value of this investment at the end of three years Rs.3310

Time preference for money is generally expressed by an interest rate

Net Present Value is the difference between the present value of cash inflows and the present value of
cash outflows

The discount rate is the interest rate that investors could earn on bonds true

When the market price is lower than the face value, the bond is traded at a Discount

___________is a fixed payment or receipt each year for a specified number of years Annuity

If yield is lower as market price is at a Discount to a par value

Both NPV and IRR help in comparing competing projects .Under Mutually exclusive projects sometimes
NPV and IRR give different results ,then NPV is better methodology No ,IRR is better methodology f

A bond is repaid on Maturity

If Interest rate is not specified on the bond. Maturity value is specified that bond is Deep discount bonds

The interest rate on a bond is fixed unless it is specifically stated to be___________ in which the
benchmark rate and reset periodicity will be indicated Floating

Price of the pure discount bond is the present value of the future inflow = face value of the bond / ( 1+r )
n

Wrong answers.

When the market price is higher than the face value, the bond is traded at a

-Pure Discount Bonds do not carry an___________ interest rate

-Time preference for money is generally expressed by

-What are the features of the investment decision?

-NPV takes into account the

-IRR Stands for

-What is paid on the face value

-When the yield is less than the coupon rate, price of bond decreases

-FV of an annuity =

-Bonds issued by Public sector companies are considered risk free and secure

-Rate of interest which equates discounted value of cash flows to the current market price

-Net Present Value Method is a _________ cash flow technique for making investment decisions
-Present value can be calculated using ___________ excel function

-Present values are___________ than the corresponding future value

-IRR technique is useful when rescheduling

-In amortisation principal will___________with annual payments and interest will be calculated on the

-When will the bond trade at a discount?

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-The discount rate is the interest rate that investors could earn on bonds

-Rate of interest which equates discounted value of cash flows to the current market price

-Bonds issued by Public sector companies are considered risk free and secure

-IRR technique is useful when rescheduling

-Both NPV and IRR help in comparing competing projects .Under Mutually exclusive projects sometimes
NPV and IRR give different results ,then NPV is better methodology