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

question 59

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

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Definitions:

Connie Gersick

A researcher known for her work on group dynamics, especially the concept of punctuated equilibrium in project teams.

Punctuated Equilibrium

A theory suggesting that evolutionary development is marked by isolated episodes of rapid speciation between long periods of little or no change.

Hierarchy

A structure where groups or individuals are organized in levels of importance or power, each one superior to the one below.

Informal

Informal pertains to actions or situations that occur without official formality, often characterized by a relaxed, casual approach.