Qbank disputes... again beginning, speaking, expected, because, demand

scruge

1.) Generally speaking, an upward sloping yield curve can be expected when:

A.)supply of long-term funds falls short of demand and investors begin to show preference for more liquid/less risky short term securities.

B.) supply of long-term funds falls short of demand

C.) inflationary expectations are beginning to subside and investors begin to show a preference for more liquid/less risky short term securities

I chose C, because if demand exceeds supply, won't that result in PRICE going up in the treasury and yield going down? Answer was A

2.)Last years div is $3.10/share
Growth rate constant at 10%
Return on market is 12%
RFR is 4%
Beta is 1.1

Value is
A.) $34.95
B.) $121.79
C.)$26.64

I used CAPM and got Req rate of ret as 12.8, and made D1 = 3.1(1.1) = 3.41/k-g to get the answer, $121.79, which was correct. However, I thought they missed the discounting of $121.79 / 1.12 (req return) ... no?

3.)Value of an int-rate call option at expiration is zero or the :

A.)market rate minus exercise rate, adj for the period of the rate, times principal amount.

B.)PV of market rate minus excercise rate, adj for period of rate, times principal amount

C.) exercise rate minus market rate, adj for period of rate, times principal amount

I went back and forth with A and B and chose A, because I didn't remember seeing anywhere other than FRA where you discount by the rate at expiration. However they said B and referenced the text, which I read, and had no mention of any discounting, whats up with this one?