Corporate bonds typically offer higher yields than government bonds due to the increased risk associated with lending to corporations compared to lending to governments. Government bonds are often perceived as safer investments because they are backed by the government’s ability to tax and print money. Conversely, corporate bonds involve the risk of default if the issuing corporation faces financial difficulties, leading investors to demand higher yields as compensation for this additional risk.
Corporate bonds also provide interest payments, contrary to the suggestion that they do not pay interest. They are issued by a wide range of organizations, including for-profit corporations, and not merely by non-profit entities. While corporate bonds carry risks, they are not completely risk-free investments, as there is potential for issuer default, changes in interest rates, and fluctuations in market value. Therefore, option A accurately reflects the nature of corporate bonds in comparison to government bonds.