Assume that interest rates on 20-year Treasury and corporate bonds are as follows: T-bond = 7.72% AAA = 8.72% A = 9.64% BBB = 10.18%The differences in these rates were probably caused primarily by:
A. Tax effects.
B. Default and liquidity risk differences.
C. Maturity risk differences.
D. Inflation differences.
E. Real risk-free rate differences.
Answer: B
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