Rank from lowest credit risk to highest credit risk the following bonds, with the same time to maturity, by their yield to maturity: Treasury bond with yield of 5.55%, IBM bond with yield of 7.95%, Trump Casino bond with a yield of 9.15%, and Banc Ono bond with a yield of 6.12%.

Question

Quizplus · Accepted Answer

The yield to maturity is generally higher for bonds with higher credit risk. Therefore, the bond with the lowest yield (Treasury bond) has the lowest credit risk, and the bond with the highest yield (Trump Casino bond) has the highest credit risk.

Rank from Lowest Credit Risk to Highest Credit Risk the Following