1 A company makes consumer products. Revenues have been growing at 2% a year very steadily. The company has been very conservative with its business approach. It has been happy to just maintain market share. The company's board then replaces the CEO. They bring in a new CEO who has a great track record expanding businesses. In her interviews for the job, she spoke about a need for the company to take risks to grow the business. Is the credit better with the prior CEO or the new CEO? Why or why not? Question 2 Two states, virtually identical with populations and economies. Both have low levels of debt. Both have a state income tax of 5%. A recession happens which causes a budget deficit of a similar amount for both. One state approves a decent sized borrowing to fill the hole. One state approves a personal income tax hike of 4% to fill the hole. Describe the pros and cons of each approach from a credit perspective. Hint: Think about the short and long term effects these decisions will have on expenses and revenues. Bond Math Question 3 If the yield curve is flat at 2% and then