1) Which of the following most accurately describes credit rating agencies: i)                They provide an unbiased assessment of firm default risk

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1) Which of the following most accurately describes credit rating agencies:

i)                They provide an unbiased assessment of firm default risk.

ii)                 The announcement of their ratings' changes often moves the YTM of corporate bonds.

iii)            Unlike in school, a "D" is the best credit rating a firm's bond can receive and an "A" is the worst.

iv)                There are conflict of interest issues due to the way they get paid for their work.

A)           i).

B)           ii) & iv).

C)           ii).

D)           ii), iii) & iv).

2.  A bond is issued on January 1, 2020 and pays its coupons once annually. Its coupon rate is 4.7%, its maturity is 2 years, its face value is $1,000, and it is purchased at par on January 1, 2020. What is the rate of return from January 1, 2020 until January 2, 2021 if the bond is selling at a yield to maturity of 3.6% by January 2, 2021?

A) 1.06%.

B)  2.82%.

C)  5.73%.

D) 5.76%.