Choose the best response. When current market rates equal the coupon interest ra

Question

Choose the best response.

When current market rates equal the coupon interest rate, the price of the bond: a. Goes up b. Goes down c. Does not change from its par value If investment projects are mutually exclusive, always accept the project with: a. The higher NPV b. The higher IRR c. The higher profitability index When current market rates are greater than the coupon interest rate, the price of the bond: a. Goes up b. Goes down c Does not change from its par value When ls a confict in the NP and the IRR a problem: a. When the projects are mutually exclusive b. When the projects are independent c. when the payback on the projects is ess han three years When current market rates are less than the coupon interest rate, the price of the bond: a. Goes up b. Goes down c. Does not change from its par value

Explanation / Answer

When current market rate is equal to coupon, then the price does not change from par

If investment projects are mutually exclusive, always choose the project with higher NPV

When current market rate is greater than coupon, then price goes down

When projects are mutually exclusive, then there can occurr a conflict between NPV and IRR

When current market rates less than coupon, the price goes up

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