Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows: T-bond = 7.72% A = 9.64% AAA = 8.72% BBB = 10.18% The...

Assume that interest rates on 20-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows:

T-bond = 7.72% A = 9.64%
AAA = 8.72% BBB = 10.18%

The differences in rates among these issues were most probably caused primarily by:

	a.	Tax effects.
	b.	Inflation differences.
	c.	Maturity risk differences.
	d.	Default risk and liquidity differences.
	e.	Real risk-free rate differences.

Jun 05, 2022

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