The yield curve for corporate bonds is normally affected by interest rate expectations, a liquidity premium, and the specific maturity preferences by corporations issuing bonds.

Question

Quizplus · Accepted Answer

The yield curve for corporate bonds is affected by interest rate expectations, as changes in interest rates can impact the value of the bond. The yield curve also includes a liquidity premium, which accounts for the risk associated with holding a bond that may be difficult to sell in the market. Additionally, corporations issuing bonds may have specific maturity preferences and this can affect the yield curve by influencing the supply and demand for bonds with different maturities. Therefore, all of the options listed in the statement are factors that can impact the yield curve for corporate bonds.

The Yield Curve for Corporate Bonds Is Normally Affected by Interest