Question

What is the primary reason for us government bond yields.

Answer 1

The primary reason for US government bond yields is that the US government is considered an extremely safe borrower. Firms that are perceived as riskier borrowers will have to pay higher interest rates. High-yield bonds are offered to compensate for the higher chance of default associated with riskier borrowers.

Step-by-step explanation:

The primary reason for US government bond yields is that the US government is considered an extremely safe borrower. When the US government issues Treasury bonds, it can pay a relatively low-interest rate because of its high creditworthiness. On the other hand, firms that are perceived as riskier borrowers will have to pay higher interest rates when they issue bonds. These higher rates are offered to compensate for the higher chance of default associated with riskier borrowers. Bonds that offer high-interest rates are known as high-yield bonds or junk bonds.

Answer 2

Answer: Government bonds form a large proportion of investor holdings, and corporate bonds are often priced relative to corporate bonds.

Step-by-step explanation:

A drop in which of the following measures would typically send a government bond price down? U.S. government bonds offer higher returns than corporate bonds, so investors find government bonds a more attractive investment. All governments mandate interest rates as part of their economic policy. Non-government borrowers are slightly less safe and therefore must offer slightly lower yields.