Risk premium over the default-free bond yield

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Reference no: EM13886878

Municipal bonds might pay a risk premium over the default-free bond yield because

A. Default-free Treasury bonds include more income tax breaks relative to municipal bonds.

B. The default risk on corporate bonds falls below that on municipal bonds.

C. The default risk on municipal bonds exceeds that on Treasury bonds.

D. The liquidity of municipal bonds exceeds that of Treasury bonds.

Reference no: EM13886878

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