Government bonds have lower yield to maturity than do corporate bonds of the same maturity because the [blank] premium is lower for government bonds.

Question

Quizplus · Accepted Answer

The correct answer is C) default. Government bonds have a lower risk of default compared to corporate bonds. This means that investors are less concerned about the default risk when investing in government bonds, and hence they demand a lower premium for investing in government bonds, resulting in a lower yield to maturity.

Government Bonds Have Lower Yield to Maturity Than Do Corporate