P1.Select the incorrect statement regarding the risk of Treasury securities.

Group of answer choices

Treasury Bills are considered to be risk-free

Treasury Notes are considered to be default-risk free, but not risk-free overall.

Interest rate risk affects Treasury Bonds, but not Treasury Notes or Treasury Bills.

Treasury Bonds face some liquidity risk in secondary markets.

P2.

Select the incorrect statement about AAA rated corporate bonds.

Group of answer choices

Bonds that are rated AAA tend to pay the lowest coupon rates, therefore reducing the cost of debt for issuing firms

Fewer than five companies have AAA rated bonds

Because interest rates are currently low (by historical standards), firms can issue bonds rated worse than AAA and still maintain a low cost of debt

Most firms try to achieve a AAA rating on their bonds, despite the fact that they have to give up financial flexibility to do so.