Investors who own bonds having lower credit ratings should expect:

Question

Quizplus · Accepted Answer

Bonds with lower credit ratings typically have a higher risk of default, meaning investors should expect higher default possibilities. This increased risk is compensated by higher yields to maturity and coupon payments, but since these options are not given, B is the best answer. A higher default risk will also typically result in a lower present value of cash flows for investors.

Investors Who Own Bonds Having Lower Credit Ratings Should Expect