Question $27(2\mathrm{.}5$ points$)$

Assume that listerest rates on $20-$year Treasury and corporate bonds with different raings, all of which are noncallable, are as follows:

Thond $=7\mathrm{.}72\%,A=9\mathrm{.}6m\%$

AAA$=8\mathrm{.}72\%,BBB=10\mathrm{.}18\%$

The differences in rases among these issues were mont probably caused primarily by:

A$)$ Real risk$-$free rate differences.

B$)$ Tax effects.

C$)$ Default risk and liquility differences.

D$)$ Maturity risk differences.

E$)$ Inflasion differences.