Two of the Primary Differences Between a Corporate Bond and a Treasury

question 16

Multiple Choice

Two of the primary differences between a corporate bond and a Treasury bond with identical maturity dates are related to

• A)interest rate risk and time value of money.
• B)time value of money and inflation.
• C)taxes and potential default.
• D)taxes and inflation.
• E)inflation and interest rate risk.

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Definitions:

Behavioral Economics

A field of study blending insights from psychology and economics to explore how people make decisions based on biases, emotions, and other non-rational factors.

Marginal Disutility

The additional dissatisfaction or negative utility a person receives from consuming one more unit of a good or service.

Successive Unit

The next unit or piece in a series or sequence, often used in the context of production or consumption.

Framing Effect

The cognitive bias where people's decisions are influenced by the way information is presented rather than the information itself.