Assume that interest rates on 20-year Treasury and corporate bonds are as follows: T-bond = 7.72% A
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Assume that interest rates on 20-year Treasury and corporate bonds are as follows:
| T-bond | = 7.72% | A | = 9.64% |
| AAA | = 8.72% | BBB | =10.18% |
The differences in rates among these issues were caused primarily by tax effects?
a) Default risk differences
b) Maturity risk differences
c) Inflation differences
d) Real risk-free rate difference
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