Question

We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that

a.

the credit risk associated with Bond A is higher than the credit risk associated with Bond B.

b.

Bond A was issued by the state of New York and Bond B was issued by the Exxon Mobil Corporation.

c.

Bond A has a term of 20 years and Bond B has a term of 2 years.

d.

All of the above are correct.

Answer 1

C. Bond A has a term of 20 years and Bond B has a term of 2 years.

Step-by-step explanation: