Ceteris paribus, a junk bond has a higher yield and higher risk premium than other bonds.

Name: Ceteris paribus, a junk bond has a higher yield and higher risk premium than other bonds.
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Question

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Junk bonds are considered to have a higher risk of default than other bonds, therefore investors demand a higher yield (return) for taking on that risk. This higher yield is reflected in the higher risk premium associated with junk bonds.

Ceteris Paribus, a Junk Bond Has a Higher Yield and Higher