Which security below should we use as a benchmark to measure the default risk of a 3-year bond issued by a bank?
A)3-year Commonwealth government bond
B)1-year bond issued by a bank
C)3-year Corporate bond
D)There are not enough data to conclude.

Question

Quizplus · Accepted Answer

A 3-year Commonwealth government bond is typically used as a benchmark for measuring default risk because it is considered risk-free, allowing for a comparison of the additional risk associated with the bank's bond.

Which Security Below Should We Use as a Benchmark to Measure