1. Which of the following statements is CORRECT?

		Even if the pure expectations theory is correct, there might at times be an inverted Treasury yield curve.
		If the yield curve is inverted, short-term bonds have lower yields than long-term bonds.
		The higher the maturity risk premium, the higher the probability that the yield curve will be inverted.
		Inverted yield curves can exist for Treasury bonds, but because of default premiums, the corporate yield curve cannot become inverted.
		The most likely explanation for an inverted yield curve is that investors expect inflation to increase in the future.

2.Which of the following statements is CORRECT?

		One disadvantage of organizing a business as a corporation rather than a partnership is that the equity investors in a corporation are exposed to unlimited liability.
		Using restrictive covenants in debt agreements is an effective way to reduce conflicts between stockholders and managers.
		Managers generally welcome hostile takeovers since the "raider" generally offers a price for the stock that is higher than the price before the takeover action started.
		The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers.
		Most business in U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.