Suppose Bond A is a 10-year bond with low default risk, and Bond B is a 10-year bond with high default risk. Then, compared to Bond A, Bond B will have a

• a.Higher yield and a higher price
• b.Higher yield and a lower price
• c.lower yield and a higher price
• d.loweryieldandalowerprice

Bond prices and the interest rate are

• a.unrelated
• b.positively related
• c.negatively related
• d.eitherpositivelyrelatedornegativelyrelated,dependingonwhetherthemarketparticipantisabondbuyerorseller

Which of the following statements is true?

• a.If the yield to maturity on a coupon bond exceeds the coupon rate, then the price of the bond is below face value.
• b.If the yield to maturity on a coupon bond exceeds the coupon rate, then the price of the bond is above face value
• c.If the yield to maturity on a coupon bond exceeds the coupon rate, then the price of the bond is equal to face value
• d.Iftheyieldtomaturityonacouponbondexceedsthecouponrate,thenthepriceofthebondmaybebelow,above,orequaltofacevalue

Other things equal, a bank with a greater amount of equity capital

• a.Has a lower risk of becoming insolvent
• b.Has a higher rate of return on equity to owners
• c.Has a greater degree of liquidity
• d.Issubjecttogreaterregulatoryrestrictions

When a bank suffers a deposit outflow and experiences a reserve deficiency, the bank will most likely try which of the following first to correct that deficiency

• a.Call in some loans
• b.Lend to another bank via the federal funds market
• c.Sell some of its securities
• d.Transfer money from some of its depositors accounts