Part 1. True/False (3 points each) 1. Bond prices always move in the same direction as interest rates. T F 2. Most corporate bonds are collateralized by the firm's assets. T F 3. The risk associated with the nature of a business is called financial risk. T 4. An investor would exercise conversion on her bond if the firm's common stock price hit an all-time low. T F 5. Bonds with a AAA rating are in high risk of defaulting. F 6. The call feature gives the bond issuer the right to force the bondholders T to turn in their bonds for the call price. T F 7. Acme Corp.'s product becoming obsolete due to technological advancements is an example of systematic risk. T F 8. Junk bonds are attractive to investors due to their low interest rates. F 9. The uncertainty that future inflation will erode the purchasing power T of assets and income is called interest rate risk. T F 10. If the world entered into a global recession this would represent a systematic risk