CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

The yield to maturity on otherwise identical option-free bonds issued by the U.S. Treasury and a large industrial corporation is 6 percent and 8 percent, respectively. If annual inflation is expected to remain steady at 2.5 percent over the life of the bonds, the most likely explanation for the difference in yields is a premium due to ______.
A. maturity
B. default risk
C. inflation
Explanation: The difference is attributed to default risk.

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