Assume That Interest Rates on 15-Year Noncallable Treasury and Corporate $$\text { T-6and =7.72\% } \quad \mathbf { A } = 9.64 \%$$

question 100

Multiple Choice

Assume that interest rates on 15-year noncallable Treasury and corporate bonds with different ratings are as follows: $$\text { T-6and =7.72\% } \quad \mathbf { A } = 9.64 \%$$
$\begin{array} { l l } \mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \% \end{array}$
The differences in rates among these issues were most probably caused primarily by:

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

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