The April 29, 1994, issue of The Wall Street Journal contained a table showing yield compar-


isons for groups of corporate bonds. The following data have been adapted from the table:

Required Prepare written answers to the following questions.

a. In each column of numbers, why do the yield rates increase from top to bottom?

b. For the high quality and medium quality bonds, what could account for the increase in the yield rates from \(4 / 27 / 94\) to \(4 / 28 / 94\) ? Take into consideration the economic events occurring at about that time.

c. Which risk class of bonds was closest to its 52 -week high on \(4 / 28 / 94\) ? What could have been the cause?

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Yield Percentage As of 52-week 4/28 4/27 High Low Risk category 1-10 year maturities: High quality 7.08% 6.94% 7.16% 5.32% Medium quality 7.41 7.26 7.49 5.76 Over 10 year maturities: High quality 7.91 7.81 8.06 6.93 Medium quality 8.36 8.25 8.49 7.29 High-yield bonds 10.45 10.48 10.53 9.25 Standard & Poor's ratings were: High quality AAA to AA Medium quality A to BBB High yield BB to C