awp-award-investment-planning Practice Test

1Multiple ChoiceSelect all that apply

A client is comparing two investments for the medium term. Investment A is a corporate bond issued by a company rated BBB, and Investment B is a UK government gilt (gilts are considered default-free for exam purposes). Which two statements correctly describe the relative characteristics of these investments? (Choose two.)

A.Investment A would typically offer a higher yield than Investment B to compensate investors for the additional credit risk
B.Investment A would typically offer a lower yield than Investment B because corporate bonds are tax-advantaged
C.Investment A carries greater default risk than Investment B, as BBB is below the typical investment-grade threshold's safest tier
D.Investment A and Investment B would have identical yields because both pay a fixed coupon
E.Investment B's price is more sensitive to changes in interest rates because gilt durations tend to be longer

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