Why Are the Interest Rates of Government of Canada Notes

question 97

Multiple Choice

Why are the interest rates of Government of Canada notes less than the interest rates of equivalent corporate bonds?

• A)The Canadian government has a high credit spread.
• B)There is significant risk that the Canadian government will default.
• C)Canadian government securities are widely regarded to be risk-free.
• D)Canadian government securities are generally used to determine interest rates.
• E)Canadian government securities have a larger supply and thus a lower price.

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