Which of the following factors could explain difference in yields on bonds with the same time to maturity?
A) default risk
B) tax considerations
C) liquidity
D) all of the above

Question

Quizplus · Accepted Answer

All of the factors listed - default risk, tax considerations, and liquidity - can explain differences in yields on bonds with the same time to maturity. Default risk affects the perceived riskiness of the bond, tax considerations can affect the after-tax return for different investors, and liquidity refers to how easily the bond can be bought or sold in the market, which can also impact its yield.

Which of the Following Factors Could Explain Difference in Yields