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)
-In Figure 14.1 above, the 10-year bond yield is considered ________, while the BAA bond yield represents ________.

A) the federal funds rate; the financial friction
B) the saving rate; the lending rate
C) the financial friction; the prime lending rate
D) a risk-free interest rate; a risky interest rate
E) inflation; the M1 money growth rate