1. If a firm raises capital by selling new bonds, it is called the "issuing firm," and the coupon rate is generally set equal to the required rate on bonds of equal risk.

Group of answer choices

True

False

2. There is an inverse relationship between bonds' quality ratings and their required rates of return. Thus, the required return is lowest for AAA-rated bonds, and required returns increase as the ratings get lower. NOTE AAA bonds are the highest rated bonds as they have the lowest amount of default risk (virtually zero).

Group of answer choices

True

False