1) Which of the following two statements is correct? S1: The real risk-free rate of return captures a bonds liquidity risk. S2: Holding all else equal, bonds with call provisions are more likely to get called by the bond issuer after substantial interest rate increases.

Group of answer choices

Both statements are true

S2 is true but S1 is false

S1 is true but S2 is false

Both statements are false

2) Which of the following statements is correct?

S1: Holding all else unchanged, as a result of price risk the interest rates for long-term bonds are lower than the interest rates for short-term bonds.

S2: Reinvestment risk of a short-term bond is lower than the reinvestment risk of a long-term bond.

Group of answer choices

S1 is true but S2 is false

Both statements are true

Both statements are false

S2 is true but S1 is false