1. Empirical evidence of liquidity premium indicates
(a) the longer the maturity, the larger the liquidity premium.
(b) they exist for up to one-year maturity.
(c) they only explain flat yield curves.
(d) they don't exist.
(e) they don't exist for declining yield curves.
2. The rate that equates a noncallable bond's future cash flows with the current price is
(a) coupon yield.
(b) yield to call.
(c) actual yield-to-maturity.
(d) current yield.
(e) promised yield-to-maturity.