If a bond for Alexcorp has a 10% rate of return and an otherwise identical bond for Tylercorp has a 15% rate of return, which bond carries greater risk?

Question

Quizplus · Accepted Answer

The bond with a higher rate of return (in this case, the Tylercorp bond with a 15% rate of return) typically carries greater risk. This is because investors require a higher return to compensate for the higher risk they are taking on. Therefore, the Tylercorp bond is riskier than the Alexcorp bond.

If a Bond for Alexcorp Has a 10% Rate of Return