In a Recent Year,interest Rates on Long-Term Government and Corporate

question 22

Multiple Choice

In a recent year,interest rates on long-term government and corporate bonds were as follows:
T-bond= 7.72%
A= 9.64%
AAA= 8.72%
BBB= 10.18%
The differences in rates among these issues were caused primarily by

• A) Tax effects.
• B) Default risk differences.
• C) Maturity risk differences.
• D) Inflation differences.
• E) Answers b and d are both correct.

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A principle stating that each employee should report to one and only one manager to avoid confusion and conflict.

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