Use the following statements to answer this question: I. The effective yield is generally easier to compute for a perpetuity than for a 10-year bond.
II) Two perpetuities that have the same annual payment must have the same price, even if the issuers of the bonds are different companies.

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Statement I is true because the effective yield can be calculated simply by dividing the annual payment by the price of the perpetuity, while for a 10-year bond, the calculation involves considering the interest rate, coupon payment, and time value of money. Statement II is false because the price of a perpetuity depends not only on the annual payment but also on the interest rate and the creditworthiness of the issuer. Therefore, two perpetuities with the same annual payment can have different prices if the issuers are different companies.

Use the Following Statements to Answer This Question: I