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Question
Consider the following four debt securities, which are identical in every characteristic except as noted: W: A corporate bond rated AAAX: A corporate bond rated BBB
Y: A corporate bond rated AAA with a shorter time to maturity than bonds W and X
Z: A corporate bond rated AAA with the same time to maturity as bond Y that trades in a more liquid market than bonds W, X, or Y
Which of the following is the most likely order of the interest rates (yields to maturity) of the bonds from highest to lowest?
a. X, W, Y, Z
b. W, X, Z, Y
c. X, Y, Z, W
d. X, Z, W, Y
Answer
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