The difference is the real rate of interest

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Reference no: EM131020064

Suppose you see the following rates in the marketplace: 10-year T-bond with a 4.56% yield, 10-year corporate bond with S&P rating of AAA with a 6.67% yield, and a 10-year corporate bond with S &P rating of BBB with an 8.32% yield. The rate differences are most likely the result of

a. The difference is the real rate of interest

b. The differences in inflation

c. The differences in the likelihood of default

d. the difference in taxes

e. The differences in compounding periods.

Reference no: EM131020064

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