We would expect the interest rate on Bond A to be lower than the interest rate on Bond B if the two bonds have identical characteristics except that
A)Bond A was issued by a financially weak corporation and Bond B was issued by a financially strong corporation.
B)Bond A was issued by the Exxon Mobil Corporation and Bond B was issued by the state of New York.
C)Bond A has a term of 1 year and Bond B has a term of 5 years.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Shorter-term bonds typically have lower interest rates compared to longer-term bonds due to lower risk associated with the shorter time frame.

We Would Expect the Interest Rate on Bond a to Be