We Would Expect the Interest Rate on Bond a to Be

Multiple Choice

We would expect the interest rate on Bond A to be higher than the interest rate on Bond B if the two bonds have identical characteristics except that

A) the credit risk associated with Bond A is lower than the credit risk associated with Bond B.
B) Bond A was issued by the city of Philadelphia and Bond B was issued by Red Hat Corporation.
C) Bond A has a term of 20 years and Bond B has a term of 2 years.
D) All of the above are correct.