The reason for a difference in the yield between a Aaa corporate bond and an otherwise identical Baa bond is the risk premium; other things being equal.

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The risk premium is the additional return an investor requires to compensate for taking on additional risk, and it is the primary reason for the difference in yield between a higher-rated Aaa corporate bond and an otherwise identical lower-rated Baa bond. Other factors that could also impact the yield difference include market conditions, supply and demand, and liquidity considerations.

The Reason for a Difference in the Yield Between a Aaa