Assume that interest rates on 15-year noncallable Treasury and corporate bonds with different ratings are as follows: T-bond = 7.72% A = 9.64% AAA = 8.72% BBB Patien 10.18% The differences in rates among these issues were most probably caused primarily by: Tax effects. Default risk differences. Maturity risk differences. Inflation differences. QUESTION 6 What is the yield to maturity of a corporate bond with 20 years to maturity, a coupon rate of 7% per year, a $1,000 par value, and a current market price of $1,250? Assume semiannual coupon payments. 4.27% 4.76% 5.01% 5.18% 5.35% 00 000
