(I)If a Corporation Suffers Big Losses,the Demand for Its Bonds

Multiple Choice

(I) If a corporation suffers big losses,the demand for its bonds will rise because of the higher interest rates the firm must pay.
(II) The spread between the interest rates on bonds with default risk and default-free bonds is called the risk premium.

A) (I) is true, (II) false.
B) (I) is false, (II) true.
C) Both are true.
D) Both are false.