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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Definitions:

Chemical Burn

Tissue damage caused by exposure to a corrosive substance, which can affect the skin and eyes among other body parts.

Eye Irrigations

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A solution used in intravenous therapy for fluid and electrolyte replenishment, containing sodium, chloride, potassium, calcium, and lactate.

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An injury caused by the exposure of skin or eyes to hazardous chemicals in liquid form, often requiring immediate medical attention.