Which Two of the Following Factors Cause the Yields on a Corporate

question 74

Multiple Choice

Which two of the following factors cause the yields on a corporate bond to differ from those on a comparable Treasury security?
I.inflation risk
II.interest rate risk
III.taxability
IV.default risk

• A)I and II only
• B)III and IV only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Consumes

The act of using up a resource or goods in the process of satisfying human needs or wants.

Utility Function

A utility function is a mathematical representation that assigns a level of utility or satisfaction to combinations of goods and services consumed.

Income

Refers to the income earned, either periodically or consistently, from employment or investment ventures.

Utility Function

A mathematical expression that ranks preferences over a set of goods or outcomes, representing satisfaction or happiness derived from consumption.