Suppose two investments yield the same fixed return as measured in dollars, say, $100. But the dollar return to one security has certainty (such as a US Treasury obligation) and the return to the other is uncertain (such as a junk bond which may default). And further suppose that, for the moment, the price of each security is $1,000 and the percentage annual return of each is therefore 10%. This situation cannot persist as investors buy and sell these bonds in response to the perceived risk differences between the two investments. What would be a possible equilibrium price and return for each security? Note that you don't need to make any calculations to solve this. It is a conceptual problem - in which direction should the price and yield move for each security given their differences in risk? In other words, which of the answers below are a possible equilibrium outcome for this situation?
a.	Treasury Security: Price = $1,500, r = 6.67%
	Junk Bond: Price = $850, r = 12.0%
b.	Treasury Security: Price = $1,500, r = 20%
	Junk Bond: Price = $1,200, r = 12%
c.	Treasury Security: Price = $800, r = 16.67%
	Junk Bond: Price = $1,200, r = 8.33%
ANS.