QUESTION 12 Which of the following statements is most correct? a. More firms fail or suffer financial distress during periods of recession than during periods of economic expansion. Thus, investors tend to require higher premiums to compensate for default risk when the economy is in a recession or is expected to enter one. b. The risk-free rate of interest is found by combining the real rate of interest and the rate paid on U.S. Treasury debt. C. Treasury bonds may be issued with any maturity but generally have an original maturity in excess of one year, d. The maturity premium is the compensation that investors demand for holding securities that cannot easily be converted to cash without major price discounts