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7. Assume that interest rates on 15-year non-callable Treasury and corporate bonds with different ratings are as follows: T-bond = 7.72% A = 9.64% AAA

7. Assume that interest rates on 15-year non-callable Treasury and corporate bonds with different ratings are as follows:

T-bond = 7.72%

A = 9.64%

AAA = 8.72%

BBB = 10.18%

What is the primary explanation in the differences in rates among these issues?

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