rise, bonds previously issued at lower interest rates will sell for less than face value. Conversely, when

interest rates fall, bonds previously issued at higher interest rates will sell for more than face value.

Figure 17.5 shows bond yield for two kinds of bonds: 10-year Treasury bonds (which are officially called

“notes”) and corporate bonds issued by firms that have been given an AAA rating as relatively safe borrowers

by Moody’s, an independent firm that publishes such ratings. Even though corporate bonds pay a higher

interest rate, because firms are riskier borrowers than the federal government, the rates tend to rise and fall

together. Treasury bonds typically pay more than bank accounts, and corporate bonds typically pay a higher

interest rate than Treasury bonds.

FIGURE 17.5 Interest Rates for Corporate Bonds and Ten-Year U.S. Treasury Bonds The interest rates for corporate
{"upload_timestamp": "2026-02-07T15:24:38.309401", "creator": "PDFMiner", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "batch_upload": true, "creationdate": "2022-12-07T14:15:44-06:00", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "producer": "Prince 14.2 (www.princexml.com)", "file_size_mb": 26.99, "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "uploaded_via": "batch_uploader", "total_pages": 597, "title": "Principles of Microeconomics 3e", "file_type": ".pdf"}