1. Consider a bond that has a present value of $1,000. If the annual rate of interest is 7 percent, the future value of the bond after a year is
- $930.00
- $934.58
- $1,000.00
- $1,070.00
2. A debt security with just one payment at a future date is referred to as a
- coupon bond
- fixed-payment security
- discount bond
- perpetuity
3. Which of the following statements is true of a perpetuity
A perpetuity has a fixed maturity
The present value of each payment made by a perpetuity is less than the previous payment
The present value of a perpetuity that pays $100 every year when the annual rate of discount is 5% is $1,000
The present value of a perpetuity that pays $200 every year when the annual rate of discount is 7% is $1,750