Bloomberg. com - Markets
Rates & Bonds
10 Year Government Bond Yields

COUNTRY YIELD

United States 0.68 %
Canada 0.76 %
Mexico 7.3 0%
Switzerland -0.38%

a) Assuming that bond rating agencies, such as Moody’s and Standard & Poor’s, have rated the government bonds of the US, Canada, Switzerland, and Germany free of risk of default-with a grade of AAA - how do you explain the apparent differences between, the US bond rate on the one hand and the Swiss bond rate and the Canadian bond on the other hand? Explain the theory behind this.
(b) How do you explain the apparent difference between the US bond rate and that of Mexico’s if Mexican Bonds are ranked riskier than that of the US?
Now consider the following chart: