Which factors indicate that in-depth credit analysis of high-yield bonds is important?

Question

Quizplus · Accepted Answer

All of the factors listed indicate that in-depth credit analysis of high-yield bonds is important. The large number of high-yield issues suggests that investors need to be selective in choosing which bonds to invest in, and a thorough credit analysis can help identify the most promising opportunities. The overall decline in quality of these bonds means that investors face greater default risk, which can be evaluated more accurately with in-depth analysis. The wide range of quality among these bonds means that investors need to be able to differentiate between the strongest and weakest issuers, which requires careful analysis. Finally, the growing complexity of these bonds makes it even more important for investors to have a detailed understanding of the underlying credit risk.

Which Factors Indicate That In-Depth Credit Analysis of High-Yield Bonds