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

market interest rates decline sharply

the company's bonds are downgraded

market interest rates rise sharply

the company's financial situation deteriorates significantly

2.

The additional expected return to compensate for interest rate risk on debt instruments with longer maturities is called:

a	real rate of return

b	liquidity premium

default risk premium

maturity risk premium