1. What amount comes closest to the present value of an annuity of 10 consecutive annual payments of $10 that begin at the end of the first year with one exception: there is no payment at the end of year 5 (and only in that particular year)? Use an interest rate of 4%
a. $72.89 b. 69.38, c. $66.13, d. $63.11, e. $69.96
2. Holding all else equal, the premium of a call option on common stock will increase if:
I. The price of the underlying goes up
II. The volatility of the underlying goes up
III. The time to expiration gets shorter
a. Only I is true b. Only II is true c. Only III is true d. Only I and II are true e. I, II, and III are true