Asked by Nickie Thatcher on Jun 15, 2024
Verified
When a recession came along in the late 1980s:
A) the junk bond market collapsed.
B) the merger wave beginning in 1981 accelerated.
C) the mastermind of the junk bond market, Michael Milken, received the Nobel Peace Prize in Economics.
D) All of the above
Junk Bond Market
The junk bond market refers to the segment of the bond market that deals with high-yield, high-risk bonds with lower credit ratings than investment-grade.
Late 1980s
The late 1980s refer to the period from 1985 to 1989, often remembered for significant economic, cultural, and technological developments.
Recession
A significant decline in economic activity spread across the economy, lasting more than a few months, typically visible in real GDP, income, employment, industrial production, and wholesale-retail sales.
- Comprehend the historical significance and influence of significant merger movements.
- Understand the significance of risk and return in the context of financing mergers and the employment of junk bonds.
Verified Answer
PJ
Perry JohnsonJun 18, 2024
Final Answer :
A
Explanation :
The collapse of the junk bond market was a major factor in the recession of the late 1980s, as many companies that had relied on these high-risk, high-yield securities were unable to repay their debts. The other choices are incorrect: the merger wave did not accelerate during the recession, and Michael Milken did not receive the Nobel Peace Prize in Economics (in fact, he was later convicted of securities fraud and served time in prison).
Learning Objectives
- Comprehend the historical significance and influence of significant merger movements.
- Understand the significance of risk and return in the context of financing mergers and the employment of junk bonds.