1)Consider the following statements:

• Statement A:If there are no perceived changes to an entity's default risk, its bond prices can still change suddenly.
• Statement B:Tax is a factor that causes fixed future payments to be risky.

Which of the statements given above is correct?

Select one:

Only statement A

Only statement B

Neither statement A nor B

Both statement A and B

2)Consider the following statements:

• Statement A:Supply and demand forces in the bond market will price a bond differently when using different interest-rate conventions.
• Statement B:The price of a coupon-bearing bond is equal to the prices of the zero-coupon bonds that give the same cash flow profile.

Which of the statements given above is correct?

Select one:

Both statement A and B

Only statement A

Neither statement A nor B

Only statement B

3)Consider the following statements:

• Statement A:Because future payments are fixed, investing in the fixed-income markets involves very little risk.
• Statement B:Borrowers in bond markets are only involved in primary bond trades.

Which of the statements given above is correct?

Select one:

Only statement A

Only statement B

Neither statement A nor B

Both statement A and B