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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A specific span of time during which certain financial activities or measurements are recorded and assessed.

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