Which of the following statements about junk bonds is false?
A)Given the likelihood of default, it is never profitable to purchase junk bonds.
B)They pay higher interest rates than investment grade bonds due to higher perceived risk.
C)Prior to the 1970s, corporations were unable to issue junk bonds.
D)A popular measure of junk bond yields reached a record low in 2012.

Question

Quizplus · Accepted Answer

The statement that it is never profitable to purchase junk bonds given the likelihood of default is false. While junk bonds do have a higher risk of default, they also offer higher potential returns for investors who are willing to take on that risk.

Which of the Following Statements About Junk Bonds Is False