Question

Indicate whether each of the following statements is

TRUE or FALSE
1. Corporate bond yields are generally higher than
government bond yields for bonds having the same par value, coupon
rate, and matur

Answer 1

1. TRUE

Corporate bond yields are generally higher than

government bond yields for bonds having the same par value, coupon

rate, and matur

Corporate bonds have higher default risk than government bonds, so the

yields are higher to compensate investors for that risk.