In a Recent Year,interest Rates on Long-Term Government and Corporate

Multiple Choice

In a recent year,interest rates on long-term government and corporate bonds were as follows:
T-bond= 7.72%
A= 9.64%
AAA= 8.72%
BBB= 10.18%
The differences in rates among these issues were caused primarily by

A) Tax effects.
B) Default risk differences.
C) Maturity risk differences.
D) Inflation differences.
E) Answers b and d are both correct.