1. All else constant, as the market price of a bond increases the current yield _____ and the yield to maturity _____.
decreases; decreases
decreases; increases
increases; decreases
increases; increases
remains constant; increases
2. Your firm plans to build a hotel on a piece of land you own. You purchased the land three years ago for $3 million, and now the land is worth $4 million. What is the relevant cash flow at the beginning of this project related to the land?
a) -$1 million
b) -$3 million
c) -$4 million
d) -$7 million