The Following Figure Shows the BAA Corporate and 10-Year Treasury

Multiple Choice

The following figure shows the BAA corporate and 10-Year Treasury Bond yields. Refer to this figure when answering
Figure 14.1: BAA and 10-Year Bonds, 2006-2010
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
-Consider Figure 14.1 above. The difference between these two curves can be interpreted as:

A) the financial friction
B) inflation expectations
C) the risk-free rate
D) a market imperfection
E) the prime lending rate