Which of the following bonds is likely to be viewed by investors as the riskiest?
A) Subordinated debt
B) Indexed bond
C) Secured bond
D) Asset-backed bonds

Question

Quizplus · Accepted Answer

Subordinated debt is considered riskier because it ranks lower in the hierarchy of repayment if the issuer experiences financial distress. In the event of default, senior debt holders and other creditors will be repaid first, leaving less for subordinated debt holders. This makes subordinated debt more speculative and risky for investors. The other three bond types (indexed, secured, and asset-backed) have additional safeguards that make them less risky. Indexed bonds are tied to inflation, secured bonds have specific collateral backing them, and asset-backed bonds are backed by a pool of underlying assets.

Which of the Following Bonds Is Likely to Be Viewed