Assume that interest rates on 15-year noncallable Treasury and corporate bonds with different ratings are as follows:

The differences in rates among these issues were most probably caused primarily by:

Question

Assume that interest rates on 15-year noncallable Treasury and corporate bonds with different ratings are as follows:

The differences in rates among these issues were most probably caused primarily by:

Quizplus · Accepted Answer

The primary reason for the differences in interest rates among these bonds is likely due to the difference in default risk. Corporate bonds typically have a higher default risk than Treasury bonds, so they offer a higher rate of return to compensate investors for this risk.

Assume That Interest Rates on 15-Year Noncallable Treasury and Corporate