QUESTION 18 The term structure of interest rates is upward sloping for all bond types. A certain AAA-rated non-callable 10-year corporate bond has been Issued at a 6.15 percent promised yield. Which one of the following bonds probably has a higher promised yield? A similar quality municipal bond A non-callable AAA-rated corporate bond with a five-year maturity A cailable AAA-rated corporate bond with a 15-year maturity All of these choices are correct. QUESTION 16 Interest rate risk is duration. the extent that coupon rates vary with time. the potential variability in the realized rate of return caused by changes in market rates. the potential variability in the bond maturity caused by changing discount rates QUESTION 17 Classify each of the following in terms of their effect on interest rates (increase or decrease): 1. Covenants on borrowing become more restrictive. II. The Federal Reserve increases the money supply. ill. Total household wealth increases. o increases: ll increases: lll increases increases: il decreases: Ill decreases I decreases; Il decreases: Ill decreases None of these choices are correct