1. An attempt to relate bond yields from 1968-1991 to the Standard and Poor's 500 found

(a) no relationship.

(b) investment grade bonds had the largest beta.

(c) bond yields were more volatile than stock yields.

(d) over 90% of bond yield variance is explained by the stock market variance.

(e) lowest rated bonds had the largest beta.

2. Bond rating systems

(a) report levels of risk relative to other bonds.

(b) have little relationship to the actual risk.

(c) reclassify all bonds when the economy changes.

(d) maintain a fixed yield spread between rating levels.

(e) report a level of risk related to historic, absolute standards.