Which of the following factors could explain difference in yields on bonds with the same time to maturity?
A) the risk that the issuer will not make future payments
B) differences in the taxation of the bonds
C) ease of finding buyers and sellers of a bond
D) all of the above

Question

Quizplus · Accepted Answer

All of the factors listed - the risk of the issuer not making future payments (credit risk), differences in taxation, and liquidity (ease of finding buyers and sellers) - can explain differences in yields on bonds with the same time to maturity. Higher perceived risk, higher taxes, and lower liquidity typically lead to higher yields.

Which of the Following Factors Could Explain Difference in Yields