The risk structure of interest rates says:
A) The interest rates on a variety of bonds will move independently of each other
B) Lower rated bonds will have higher yields
C) U.S. Treasury bond yields always change by more than other bonds
D) Interest rates only compensate for risk in structured amounts

Question

Quizplus · Accepted Answer

The risk structure of interest rates refers to the relationship between bond ratings and their corresponding yields. Lower rated bonds are considered riskier and require a higher yield to compensate for that risk.

The Risk Structure of Interest Rates Says