Assume That Interest Rates on 20-Year Treasury and Corporate Bonds $\begin{array} { l c } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$

question 63

Multiple Choice

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings,all of which are noncallable,are as follows:
$\begin{array} { l c } \text { T-bond } = 7.72 \% & \mathrm {~A} = 9.64 \% \\\mathrm { AAA } = 8.72 \% & \mathrm { BBB } = 10.18 \%\end{array}$
The differences in rates among these issues were most probably caused primarily by:

• A) Real risk-free rate differences.
• B) Tax effects.
• C) Default risk and liquidity differences.
• D) Maturity risk differences.
• E) Inflation differences.

---

Definitions:

CNS

The central nervous system, composed of the brain and spinal cord, which processes and sends out neural signals.

PNS

The Peripheral Nervous System, which consists of the nerves and ganglia outside of the brain and spinal cord.

Cerebrospinal Fluid

The clear, colorless body fluid found in the brain and spinal cord, acting as a cushion and providing nutrients to these areas.

Composition

The act or process of creating or forming by combining parts, elements, or ingredients; can refer to writing, music, art, or any structured endeavor.