Select the correct ranking of the following securities in terms of increasing yield.(Assume that each bond has average quality within its class. )

Question

Quizplus · Accepted Answer

Municipal GO bonds typically have lower yields than municipal revenue bonds because GO bonds are backed by the general credit of the issuer while revenue bonds are backed by the revenue generated by a specific project. Corporate bonds typically have higher yields than municipal bonds because they have a higher risk of default. Therefore, the correct ranking of increasing yield is Municipal GO bond, Municipal revenue bond, Corporate bond. Thus, the only option that correctly orders the securities in increasing yield is choice B.

Select the Correct Ranking of the Following Securities in Terms