Assume That Interest Rates on 20-Year Treasury and Corporate Bonds $$\begin{array} { l l } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$$

question 76

Multiple Choice

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows: $$\begin{array} { l l } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$$ The differences in rates among these issues were most probably caused primarily by:

• A) Real risk-free rate differences.
• B) Tax effects.
• C) Default and liquidity risk differences.
• D) Maturity risk differences.
• E) Inflation differences.

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The act of spending money or utilizing resources for various purposes, including paying for goods, services, or obligations.

Expected-Rate-Of-Return

The forecasted percentage gain or loss that an investment is anticipated to generate over a specified period.

Average Total Cost

the cost per unit is calculated by dividing the entire production cost by the quantity of units produced.

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The total amount of money generated from the sale of goods or services by a company before any expenses are subtracted.