1. Extra return is NOT called:
   1. credit spread.
   2. high-yield spread.
   3. yield spread.
   4. credit risk premium.

Answer:______

1. Which of the following is NOT true for credit risk, credit ratings, and credit spreads?
   1. As the credit rating weakens, the yield rises.
   2. As the credit rating weakens, the size of the credit spread increases.
   3. The yield of a corporate bond is the difference between the yield of government bonds with the same maturity less a credit risk premium.
   4. Government bonds are considered to be default-free bonds.

Answer:______,

1. Which of the following statements is true for spot yield curves?
   1. The yield curve is rising because the spot rates decrease when maturity is lengthened.
   2. Corporate yield curves are above the government yield curve.
   3. The lower the rating, the higher the yield curve.
   4. The distance between the corporate yield curve and the government yield curve is the credit spread at a given maturity and credit rating.

Answer:______,