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Question
Which one of the following bonds is likely to have the highest required rate of return, ceteris paribus?
A. AAA-rated noncallable corporate bond with a sinking fund
B. AA-rated callable corporate bond with a sinking fund
C. AAA-rated callable corporate bond with a sinking fund
D. High-quality municipal bond
E. AA-rated callable corporate bond without a sinking fund
Answer
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