Which of the Following Bonds Have the Highest Default Risk

question 17

Multiple Choice

Which of the following bonds have the highest default risk for a given return?

• A) A U.S Treasury bond with a 2-year maturity.
• B) An AAA corporate bond with a 7-year maturity.
• C) A BBB corporate bond with a 3-year maturity.
• D) A CCC corporate bond with a 10-year maturity.
• E) An AAA corporate bond with a 3-year maturity.

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Definitions:

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