Principle of Finance

Assume that interest rates on 30-year Treasury and corporate bonds with different ratings, all of which are noncallable, are as follows: Treasury bond: 7.72% Corporate bond (AA rating): 8.72% Corporate bond (A rating): 9.64% Corporate bond (BBB rating): 10.18% The differences in interest rates among these issues were most probably caused primarily by real risk-free rate differences tax effects default risk differences maturity risk differences