As default risk increases, the expected return on corporate bonds ________, and the return becomes ________ uncertain, everything else held constant

The interest rate in the federal funds market

a. is determined by the imposition of price controls imposed by the Fed. b. will tend to rise when the quantity of funds demanded by banks seeking additional reserves exceeds the quantity supplied by banks with excess reserves. c. will tend to fall if the Fed sells bonds and, thereby, reduces the reserves available to banks. d. is an interest rate that is largely unaffected by the policies of the Fed.

The firm's most efficient level would be

A. 100 units.
B. 140 units.
C. 160 units.
D. 200 units.