One primary difference between corporate bonds and U.S. Treasury bonds is:

• A. U.S. Treasury bonds have no maturity date, while corporate bonds do.
• B. Corporate bonds are issued by the federal government, while U.S. Treasury bonds are issued by corporations.
• C. Corporate bonds generally carry higher credit risk than U.S. Treasury bonds.
• D. U.S. Treasury bonds pay interest semiannually, while corporate bonds do not pay interest.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the context of the question. The problem is asking about the differences between corporate bonds and U.S. Treasury bonds, focusing on credit risk and interest payments.
2. Step 2: Define corporate bonds. Corporate bonds are debt securities issued by corporations to raise capital. They typically carry higher credit risk because they depend on the financial health of the issuing corporation.
3. Step 3: Define U.S. Treasury bonds. U.S. Treasury bonds are debt securities issued by the federal government. They are considered low-risk investments because they are backed by the U.S. government, which has a strong credit rating.
4. Step 4: Compare credit risk. Corporate bonds generally carry higher credit risk than U.S. Treasury bonds because corporations can default on their debt, whereas the U.S. government is highly unlikely to default.
5. Step 5: Compare interest payments. U.S. Treasury bonds pay interest semiannually, which is a standard feature. Corporate bonds also typically pay interest, but the frequency and structure of payments can vary depending on the bond terms.