1. Astrid makes an investment with a zero net present value. She pays $700 today, and receives $400 one year from today, no money two years from today, and _____ three years from today. There are no other cash flows, and her effective annual interest rate is 8%.
a. $400
b. $385
c. $415
d. $370
e. $355
2. Identify and describe two financial management practices that firms use to manage credit risk
(a) liquidity risk;
(b) interest rate risk; and
(c) credit risk.