Question

what kinds of bonds are riskier (comparing taxable vs taxexempt, secured vs unsecured, callable vs non-callable - risky instruments will have a higher required rate of return (YTM) than less risky ones)

Answer 1

Tax-exempt bonds are less risky due to their tax-exempt status than taxable bonds. Hence taxable bonds will have a higher YTM.

Unsecured bonds are more risky because the do not have collateral backing them. Hence bond investor will require a higher return to invest in unsecured bonds. Unsecured bonds will have higher YTM compared to secured bonds.

Callable bonds are riskier because if interest rates fall, the issuer can call the bonds. This increases reinvestment risk for the bond investor. Hence, bond investor will require a higher return to invest in callable bonds. Callable bonds will have a higher YTM compared to non-callable bonds.