The success of junk bonds in the 1980s was based on a rationale that was eventually proven wrong. That rationale was:
A)the failure rate of risky companies is only slightly higher than that of more reputable firms.
B)risky firms fail only slightly more often than highly rated firms in good economic times.
C)during hard times, risky companies fail a lot more frequently than higher rated firms.
D)None of the above correctly states the junk bond rationale.

Question

Quizplus · Accepted Answer

The rationale was that the failure rate of risky companies was only slightly higher than that of more reputable firms, which was proven wrong as risky companies failed significantly more often.

The Success of Junk Bonds in the 1980s Was Based