Which of the following is not true about junk bonds?
A) Junk bonds are either unrated or rated below investment grade by the credit rating agencies
B) Typically yield about 1-2 percentage points below yields on U.S. Treasury debt of comparable maturities.
C) Junk bonds are commonly used source of "permanent" financing in LBO transactions
D) During recessions, junk bond default rates often exceed 10%
E) Junk bond default risk on non-investment grade bonds tends to increase the longer the elapsed time since the original issue date of the bonds

Question

Quizplus · Accepted Answer

Junk bonds typically yield higher than U.S. Treasury debt of comparable maturities, not lower.

Which of the Following Is Not True About Junk Bonds