Which of the following is true of bonds?

Question

Quizplus · Accepted Answer

Junk bonds, also known as high-yield bonds, are issued by companies with a high credit risk and are therefore more likely to default on their debt obligations. To attract investors, these companies offer higher interest rates than those offered by strong companies. Therefore, option C is correct. The other options are incorrect as senior debt ranks higher in payment priority than subordinated debt (option A), convertible bonds typically have lower interest rates than traditional bonds (option B), and subordinated debt typically ranks lower in payment priority than junk bonds (option D).

Which of the Following Is True of Bonds