Assume That You Observe the Following Rates on Long-Term Bonds

question 39

Multiple Choice

Assume that you observe the following rates on long-term bonds: U.S. Treasury bonds = 4.15 percent
AAA Corporate bonds = 6.2 percent
BBB Corporate bonds = 7.15 percent
The main reason for the differences in the interest rates is:

• A)Maturity risk premium
• B)Inflation premium
• C)Default risk premium
• D)Convertibility premium

---

Definitions:

East Asia

A geographical region of Asia that includes countries such as China, Japan, South Korea, North Korea, and Taiwan.

Scandinavian Countries

Refers to the group of countries in Northern Europe consisting of Denmark, Sweden, Norway, Finland, and Iceland, known for their high quality of life and social welfare systems.

Professionalization

The process of developing or elevating an occupation to a status requiring specialized knowledge and often formal qualification.

Credentials

Qualifications, achievements, personal qualities, or aspects of a person's background, typically used to indicate their suitability for something.