Question $57(2\mathrm{.}5$ points$)$

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Assume that interest rates on $20-$year Treasury and coeporate bonds with different ratings, all of slick are noncallable, are as follows:

Thood $=7\mathrm{.}72\%$

AAA$=8\mathrm{.}72\%$

$A=9\mathrm{.}64\%$

$BBB=10\mathrm{.}18\%$

The differences in rates among there issues were most probably caused primarily by:

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

B$)$ Tax effects.

C$)$ Defoult risk and liquidety dufferencer.

D$)$ Matarity rik differences.

E$)$ Isflation dafferesces.