Historically, the lowest pre-tax yields have been on
A) Aa corporate bonds.
B) BBB corporate bonds.
C) Aa municipal bonds.
D) BBB municipal bonds.

Question

Quizplus · Accepted Answer

Historically, Aa rated municipal bonds have had the lowest pre-tax yields. This is because they are considered to be a relatively low-risk investment, and investors are willing to accept lower yields in exchange for the perceived safety of the investment. Aa corporate bonds may have slightly higher yields due to the higher credit risk associated with corporate debt. BBB bonds, whether corporate or municipal, have a higher credit risk and therefore typically offer higher yields than Aa bonds.

Historically, the Lowest Pre-Tax Yields Have Been on