Standard & Poor's, the credit rating agency, upgraded the Philippine's credit rating in April 2018. S&P Global Ratings cited "The Philippines government is enacting increasingly effective fiscal policies, marked by improvements to the quality of expenditures, still-limited fiscal deficits, and low levels of general government indebtedness ... At the same time, the economy continues to achieve consistently robust growth." The current yield on a ten-year Philippine government bond was 6.5% in March 2018. In contrast, the current yield on a ten-year U.S. government (Treasury) bond was 2.8% in March 2018.

1) What is the spread between the U.S. and Philippine ten-year bond current yields?

A. 0.02 basis points.

B. 2.32 basis points.

C. 232 basis points.

D. 23,214 basis points.

E. None of the above.

2) After S&P's credit rating upgrade, the Philippine current yield would, ceteris paribus, _______ due to lower _______.

A. increase; maturity

B. decrease; maturity

C. increase; risk

D. decrease; risk

E. None of the above.