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WHY would I expect a US government agency bond (like Federal Home Loan Banks or Tennessee...

WHY would I expect a US government agency bond (like Federal Home Loan Banks or Tennessee Valley Authority) to carry a higher rate of return than I would a U.S. Treasury Bond of the same maturity?

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Us government agency bonds generally carry a higher rate of return or interest due to the call risk attached with the agency bonds. Agency bonds are less liquid in comparison of treasury bond so due to low liquidity and higher call risk, investors expect a higher rate of return on agency bonds in comparison to treasury bonds of the same maturity.

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