The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding security class: YIELD (%) 15 A 12 B 5 10 15 20 25 30 YEARS TO MATURITY 3.
The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding security class: YIELD (%) 15 A 12 B 5 10 15 20 25 30 YEARS TO MATURITY 3.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question

Transcribed Image Text:The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks
involved when investing in bonds is important.
The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated
corporate bonds, and BBB-rated corporate bonds. Use the selection dropdown lists to correctly associate each curve with its corresponding security
class:
YIELD (%)
15
A
12
B
5
10
15
20
25
30
YEARS TO MATURITY
3.
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