The yields on a corporate bond differ from those on a comparable Treasury security primarily because of:

Question

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Corporate bonds typically offer higher yields than comparable Treasury securities primarily due to the additional risks they carry, including the risk of default (the issuer failing to make interest or principal payments) and the impact of taxes. Treasury securities are considered virtually risk-free in terms of default, as they are backed by the full faith and credit of the U.S. government, and their interest income is exempt from state and local taxes.

The Yields on a Corporate Bond Differ from Those on a Comparable