1. Which of the following bonds would be subject to the least amount of default risk:

a. U.S. Treasury bonds

b. Corporate bonds

c. Municipal bonds

d. The above bonds have equivalent default risk.

2. Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?

a. A reduction in market interest rates.

b. The companys bonds are downgraded.

c. An increase in market interest rates.

d. Statements a and b are correct.

e. Statements a, b, and c are correct.

3. You just purchased a $1,000 par value, 9-year, 7 percent annual coupon bond that pays interest on a semiannual basis. The bond sells for $920. What is the bonds nominal yield to maturity?

a. 7.28%

b. 8.28%

c. 9.60%

d. 8.67%

e. 4.13%

f. None of the above

please answer questions 1-3