What Is the Most Important Difference Between a Corporate Bond

question 21

Multiple Choice

What is the most important difference between a corporate bond and an equivalent U.S. Treasury bond?

• A)Corporate cash flow is relatively smooth, whereas U.S. government revenue is more variable.
• B)Corporate bonds are traded on the floor of the New York Stock Exchange, and Treasury bonds trade in the over-the-counter market.
• C)In the case of corporate bonds, firms have sometimes defaulted, whereas the U.S. government has not.
• D)The beta of corporate bonds is usually less than the beta of a U.S. Treasury bond.