Which of the following statements are ture?
I. Present value increases as interest rate increases
II. The value of a bond decreases when interest rates fall
III. The present value of 100 dollars in two years at 6% is $80
IV. Coupon payments do not affect the value of the bond Of the above:
a. All are true
b. All are false
c. I alone is false
d. I,II and III alone are false
e. I and IV alone are false
2. Determine the annual percentage interest cost for each of the following terms of sales, assuming the firm does not take the cash discount but pays on the final day of the net period (assume a 365-day year)
a. 1/20, net 30 ($500 invoice)
b. 2/30, net 60 ($1,000 invoice)
c. 2/5, net 10 ($100 invoice)
d. 3/10, net 30 ($250 invoice)