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A 20-year United States Treasury Bond selling for $1,000 yields 4 percent. A 20- year corporate bond is selling for $1,000 yields 6 percent. Which
A 20-year United States Treasury Bond selling for $1,000 yields 4 percent. A 20- year corporate bond is selling for $1,000 yields 6 percent. Which of these bonds is riskier? In general, discuss the relationship between corporate and Treasury bonds. Now say that the yield on both bonds immediately rises by 1 percent (so we can still use 20 years as the maturity date). Discuss your results.
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