Bond A is a five-year bond issued by a company with a very good credit rating. Bond B is a five-year bond issued by a different company in financial distress. Which of the following is likely?
A) Bond A will have a higher interest rate than Bond B
B) Bond A will have a higher default risk than Bond B.
C) Bond B will have a higher term risk than Bond A
D) Bond B will have a higher interest rate than Bond A.
Correct Answer:
Verified
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