Which of the statements below is TRUE regarding interest rates in the period 2000-2013?
A)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by T-bonds.
B)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by Corporate bonds.
C)The average annual rate of return earned by AAA Corporate bonds exceeded the average annual rate of return earned by T-bonds.
D)The average annual rate of return earned by T-bills exceeded the average annual rate of return earned by AAA Corporate bonds.

Question

Quizplus · Accepted Answer

During the period from 2000 to 2013, AAA Corporate bonds typically offered higher average annual rates of return compared to T-bonds. This is because corporate bonds generally carry a higher risk compared to government securities like T-bonds, and thus offer higher returns to compensate for this increased risk.

Which of the Statements Below Is TRUE Regarding Interest Rates