Because junk bonds are such high-risk instruments,the returns on such bonds aren't very high and the existence of this market detracts from social welfare.

Question

Quizplus · Accepted Answer

The statement is incorrect. Junk bonds offer higher returns than investment-grade bonds to compensate for their higher risk. While the market for junk bonds does carry risk, it also provides capital to companies that may not have access to traditional loans or funding sources, which can contribute to social welfare by supporting economic growth and job creation.

Because Junk Bonds Are Such High-Risk Instruments,the Returns on Such