Assume That Interest Rates on 20-Year Treasury and Corporate Bonds

question 42

Multiple Choice

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings,all of which are noncallable,are as follows:
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The differences in rates among these issues were most probably caused primarily by:

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

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