Because savers are generally risk-averse
A)the long-run return on corporate bonds is greater than the long-run return on corporate stocks.
B)they are more concerned about expected returns than about the variability of those returns.
C)yields incorporate an extra premium for bearing default risk.
D)they prefer higher returns to lower returns, holding default risk constant.

Question

Quizplus · Accepted Answer

Yields on investments like corporate bonds often include a premium for bearing default risk, reflecting the risk-averse nature of savers who demand higher returns for taking on additional risks.

Because Savers Are Generally Risk-Averse