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An Actively Traded,AAA-Rated,Intel Corporation Bond,maturing in 2015,provides an Expected Yield

Question 145

Essay

An actively traded,AAA-rated,Intel Corporation bond,maturing in 2015,provides an expected yield of 8%.The AAA-rated bond of a local Chicago-based company,not actively traded on any exchange,maturing in 2015,provides an expected yield to investors of 10%.The difference in expected yields is primarily due to
A) inflation premium.
B) default risk premium.
C) maturity risk premium.
D) liquidity premium.

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