1) Which of the following statements is FALSE?
If XYZ Corp's $1,000 8% bond with 10 years to maturity is selling at $960, the yield is less than 8%.
A bond with a coupon rate of 10% and yield of 12% will sell at a discount.
Prices of longer maturity bonds are more sensitive to interest rate changes.
Simple interest is charged on bank bills while compound interest is applied on bonds.
2) Which of the following statements is FALSE?
The usefulness of a vaulation multiple will depend on the nature of the differences between firms and the sensitivity of the multiples to these differences.
If all earnings are paid out as dividends, DPR is 1.
The perpetuity formula gives the present value of an infinite stream of dividends is valued at the same point in time as the first dividend.
(V0)/(EBITDA1) is an Enterprise Value Multiple.