Asked by Nurul Ainaa on Jun 18, 2024
Verified
Yields on "junk bonds" are higher than the rate of safe government bonds.
Junk Bonds
High-risk, high-yield bonds issued by companies considered to be at greater risk of default.
Government Bonds
Debt securities issued by a government to finance its borrowing requirements, offering a fixed or variable interest rate payable to holders.
- Recognize the characteristics and implications of different types of bonds and their yields.
Verified Answer
AG
Alejandro GomezJun 21, 2024
Final Answer :
True
Explanation :
Junk bonds carry a higher risk of default than government bonds, so they offer higher yields to compensate investors for the increased risk.
Learning Objectives
- Recognize the characteristics and implications of different types of bonds and their yields.