Junk bonds represent debt that was issued to:
A) finance the acquisition of used manufacturing equipment.
B) firms in countries with high rates of inflation.
C) offer higher yields and less security than other debt.
D) firms that have defaulted on their dividend payments.

Question

Quizplus · Accepted Answer

Junk bonds are issued by companies with a lower credit rating, making them riskier than other types of debt. They offer higher yields (higher interest rates) to compensate for the increased risk. Unlike other debt, junk bonds have less security because they are not backed by the same level of collateral or assets as other types of debt.

Junk Bonds Represent Debt That Was Issued To