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Options are: 1. a lower/a higher/same 2. credit risks/tax treatments/terms to maturity 3. credit risks/tax treatments/terms to maturity 4. credit risks/tax treatments/terms to maturityYou would expect a bond of the U.S. government to pay interest rate as compared to a bond of an Eastern European government.

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Answer #1

1) lower interest rate (low credit risk)

2) terms to maturity (longer duration bonds carry more risk)

3) credit risks (software company riskier than Coca-Cola)

4) tax treatments

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