Which one of the following statements is true? (D is incorrect)

	a.	Interest rate risk affects present value of the cash flows received from the bond, and hence, it affects bond price
	b.	Interest rate risk means that although promised, the future cash flows may not get paid if the company defaults
	c.	Yield to maturity is an accurate measure of investors return if the firm is in distress
	d.	Bonds are called fixed-income assets because their income is free from risk

Asset-liability management ALM is a process to protect the banks ____________ from interest rate risk (assets is incorrect)

	a.	Liabilities
	b.	Equity
	c.	Revenue
	d.	Assets

Which of the following statements is FALSE? (B is not correct)

	a.	A borrower with a vulnerable position within its industry needs to demonstrate a stronger balance sheet, compared to a borrower with a strong industry position, to earn the same credit rating
	b.	A bond graded Ba is not included in the investment grade category of bonds
	c.	Historically, senior secured bonds tend to have higher recovery rates in default compared to senior subordinated bonds
	d.	A bond graded BB will tend to have a lower credit spread than one graded BBB, all else equal