1. Two statements on bond indenture and covenants were made:

Statement 1: "In the bond indenture, the trustee represents the interests of bondholders."

Statement 2: "A bond issuer that is required to submit periodic reports to the trustee is an example of a negative covenant."

A. Both statements are correct.

B. Exactly one statement is correct.

C. None of the statements are correct.

2. The coupon rate on a floater is:

Coupon Rate = 5-year Treasury Yield - 100 Basis Points

The floater has a cap at 4%. Two statements about the coupon structure were made.

Statement 1: "When the 5-year treasury yield is 4% on coupon reset date, the coupon rate will be 4%."

Statement 2" The maximum coupon rate is 4% and that occurs when the 5-year treasury yield is at or above 5% on coupon reset date."

A. Both statements are correct.

B. Exactly one statement is correct.

C. None of the statements are correct.

3. A 10-year IBM bond can be converted into 20 shares of IBM common stock. This bond contains an embedded option which is:

A. Beneficial to the bond issuer.

B. Beneficial to the bond holder.

C. Effectively a put option owned by the bond issuer.