1. Which of the following statements is most CORRECT?
   1. The rate of interest on short-term Treasury securities is a better proxy for the risk-free rate than the rate of interest on long-term Treasury securities.
   2. Liquidity premiums are generally higher on Treasury than corporate bonds.
   3. Price risk premiums are due primarily to the fact that the probability of default is higher on long-term bonds than on short-term bonds.
   4. Default risk premiums are generally lower on corporate than on Treasury bonds.
   5. Other things held constant, a callable bond has a lower required rate of return than a noncallable bond.