Which of the following bonds is likely to be viewed by investors as the most risky?
A)subordinated debt
B)indexed bond
C)secured bond
D)asset-backed bonds

Question

Quizplus · Accepted Answer

Subordinated debt is usually viewed as the riskiest type of bond because it is subordinate to other debts in terms of claim on the issuer's assets in the event of default or bankruptcy. In other words, subordinated debt holders will be paid only after all other senior creditors have been paid. Indexed bonds are less risky because their interest payments and principal repayment are linked to an inflation index, reducing the risk of inflation. Secured bonds are less risky because they are backed by specific assets, reducing the risk of default. Asset-backed bonds are also less risky because they are backed by a pool of specific assets, reducing the risk of default.

Which of the Following Bonds Is Likely to Be Viewed