1)

Theron Corp.is looking into the following transactions to change its risk profile. Which of the following transactions will for sure increase the risk-estimate of the company (and increase the borrowing interest rate) from the z-score perspective. Mark all that apply; more than one answer could be correct.

		A) Sell some inventory on credit for no profit or loss
		B) Sell some inventory for cash for a loss
		C) Sell some inventory for cash for profit
		D) Buy some inventory on credit

2)

Some of Stewart Corp.'s ratios are given below: [Earnings from continuing operations before interest and taxes] / [Gross interest incurred before subtracting (1) capitalized interest and (2) interest income] : 0.8400 [Long-term debt plus current maturities, commercial paper, and other short-term borrowings] / [Long-term debt plus current maturities, commercial paper, and other short-term borrowings + shareholders equity (including preferred stock) plus minority interest] : 60.0600 What rating would you expect from Standard & Poors for Stewart Corp.'s bonds?

		BBB
		B to BB
		AAA
		AA
		A