In a severe recession, the major source of risk faced by investors who purchase junk bonds is
A) purchasing power risk.
B) interest rate risk.
C) liquidity risk.
D) default risk.

Question

Quizplus · Accepted Answer

In a severe recession, the major source of risk for investors in junk bonds is default risk. Junk bonds are issued by companies with lower credit ratings, making them more susceptible to defaulting on their obligations during economic downturns.

In a Severe Recession, the Major Source of Risk Faced