1) If a bond rating agencies adjusts the risk of an outstanding bond lower it is called a(n)_

a) Upgrade

b) default

c) downgrade

d) bankruptcy

2) Bond ratings are critical to a company issuing debt since the rating determines the risk of the bond and impacts the   ___________ a company must pay.

a) origination fees

b) Interest rate

c) flotation costs

d) none of the above

3) If market interest rates decline:

a) Short-term bonds will decline in value more than long-term bonds.

b) Long-term bonds will rise in value more than short-term bonds.

c) Long-term bonds will decline in value more than short-term bonds.

d) Short-term bonds will rise in value more than long-term bonds.

Which of the following affect an assetAc€?cs value to an investor?

1. Amount of an assetAc€?cs expected cash flow

2) The riskiness of the cash flow

3) Timing of an assetAc€?cs cash flows

4) Investors required rate of return

a) 1,3,4

b) 1,2,4

c) 1,2,3

d)1,2,3,4