1. (YTM) has decreased from 9% to 7%. Which of the following statements is true about the current market price of the bond?
a The bond is selling at a discount
b The bond is selling at par
c The bond is selling at a premium
d The bond is selling at book value
e Insufficient information
2. A company is trying to decide between two independent projects. Each project has a cost of capital of 12%. Project A has an IRR of 11.4%. Project B has an IRR of 11.1%. Which project should the company choose if the goal of the firm is to maximize shareholder wealth?
Project
Project B
c) Both projects should be chosen
d) Neither project should be chosen
e) This question cannot be answered unless we know the NPV of each project.