1. A 20 year general obligation bond issued by Wyoming has a yield to maturity of 2.75% while the yield to maturity of 20-year U.S. Treasury bonds is 3.15%. Which of the following explanations is most likely to explain the difference in yields?
A: The Wyoming bond is exempt from federal income taxes.
B: The Wyoming bond has a shorter maturtiy.
C: The ranching-based economy of Wyoming makes those bonds less likely to default.
D: Wyoming has a lower default risk than the federal government.
2. Which one of the following would be most likely to trigger a decrease in the price of a corporate bond issued by Kroger Stores?
A: An increase in the overall rate of inflation in the U.S.
B: An increase in Kroger's average cost of goods sold.
C: An announcement by Whole Foods Stores that the company was exiting the grocery store market because the competition was too strong.
D: A decline in the average default risk premium for US corporations.