Use the figure below for the following questions;it shows the BAA corporate and 10-Year Treasury Bond yields.
-In Figure 14.1 above,the ten-year bond yield is considered __________,while the BAA bond yield represents ____.
A)the federal funds rate;the risk premium
B)the saving rate;the lending rate
C)the risk premium,the prime lending rate
D)a risk-free interest rate;a risky interest rate
E)inflation;M1 money growth rate

Question

Use the figure below for the following questions;it shows the BAA corporate and 10-Year Treasury Bond yields. 
-In Figure 14.1 above,the ten-year bond yield is considered __________,while the BAA bond yield represents ____.
A)the federal funds rate;the risk premium 
B)the saving rate;the lending rate 
C)the risk premium,the prime lending rate 
D)a risk-free interest rate;a risky interest rate 
E)inflation;M1 money growth rate

Quizplus · Accepted Answer

The 10-Year Treasury Bond yield is considered a risk-free interest rate because it is backed by the US government and is considered the benchmark for other interest rates. In contrast, the BAA bond yield represents a risky interest rate because it is the yield on corporate bonds that are rated BAA, which is considered lower quality or more risky than AAA-rated bonds. Therefore, Choice (D) is the correct answer.

Use the Figure Below for the Following Questions;it Shows the BAA