The risk premium on corporate bonds reflects the fact that corporate bonds have a higher default risk and are ________ Canada bonds.
A) less liquid than
B) less speculative than
C) tax-exempt unlike
D) lower-yielding than

Question

Quizplus · Accepted Answer

The risk premium on corporate bonds reflects that they have a higher default risk compared to Canada bonds. Due to the higher default risk, investors require a higher return for holding corporate bonds, which increases their yield. This is why corporate bonds are less liquid than Canada bonds.

The Risk Premium on Corporate Bonds Reflects the Fact That