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1. The present value of $1000 to be received in 5 years is ________ if thediscountrate is 7.8%. (Points : 1) A $368 B $494 C $548 D $687 2. A typical measure for the risk-free rate of return is the (Points : 1) A U.S. Treasury Bill rate. B prime lending rate. C money market rate. D short-term AAA-rated bond rate. 3. The capital asset pricing model (Points : 1) A provides a risk-return trade off in which risk is measured in terms of the market volatility. B provides a risk-return trade off in which risk is measured in terms of beta. C measures risk as the coefficient of variation between security and market rates of retDurn. D depicts the total risk of a security. 4. Assume that Brady Corp. has an issue of 18-year $1000 par value bonds that pay 7% interest annually. Further assume that todays required rate of return on these bonds is 5%. How much would these bonds sell for today? Round off to the nearest $1. A $1233.79 B $1201.32 C $1134.88 D $1032.56

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