Use the information for the question(s) below.
-Why are the interest rates of U.S. Treasury securities less than the interest rates of equivalent corporate bonds?
A) The U.S. government has a high credit spread.
B) There is significant risk that the U.S. government will default.
C) U.S. Treasury securities are widely regarded to be risk-free.
D) U.S. Treasury securities yield inflation adjusted interest rates.

Question

Use the information for the question(s) below. 
-Why are the interest rates of U.S. Treasury securities less than the interest rates of equivalent corporate bonds?
A) The U.S. government has a high credit spread. 
B) There is significant risk that the U.S. government will default. 
C) U.S. Treasury securities are widely regarded to be risk-free. 
D) U.S. Treasury securities yield inflation adjusted interest rates.

Quizplus · Accepted Answer

U.S. Treasury securities are widely regarded to be risk-free, which means investors are willing to accept lower interest rates in exchange for a safer investment. Corporate bonds, on the other hand, carry more risk and therefore offer higher interest rates to compensate investors for that risk.

Use the Information for the Question(s) Below