For each of the following pairs, which bond would you expect to pay a higher interest rate?
Question:
For each of the following pairs, which bond would you expect to pay a higher interest rate?
Explain.
a. a bond of the U.S. government or a bond of an East European government
b. a bond that repays the principal in year 2013 or a bond that repays the principal in year 2030
c. a bond from Coca-Cola or a bond from a software company you run in your garage
d. a bond issued by the federal government or a bond issued by New York State
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