1. What kind of stock is most affected by changes in risk aversion.
2. An annuity due pays $400 a year for 4 years, r=6%. What is its PV? What is its FV in 4 years? Draw the time line, show your work or calculator entries using HP BII+. Show the calculator functions.
3. From a time value of money standpoint (all else equal), an increase in the interest rate will
A. increase the NPV of a particular investment.
B.have no effect on the NPV of a particular investment.
C. make a particular investment more attractive due to its positive effects on NPV.
D. decrease the NPV of a particular investment.