1. Which of the following statements is incorrect?

a. A debt rating of AAA is a worse rating than BB

b. The risk premium in the bond yield reflects default risk, liquidity risk, and issue-specific features

c. The liquidity preference theory states that investors prefer short-term debt

d. According to the expectations theory, a downward-slopping yield curve implies that interest rates are expected to decline in the future

2. When assets are sold from a CCA pool:

a. a new rate is used in the pool

b. the assets sold continue in the pool

c. The remaining pool is subject to the net acquisitions rule

d. other assets' values increase