Individual junk bonds are riskier than junk bond mutual funds.

Question

Quizplus · Accepted Answer

Individual junk bonds are subject to credit risk and default risk, whereas junk bond mutual funds are more diversified and spread out the risk among a variety of bonds. Additionally, mutual funds are managed by professionals who can monitor market conditions and make adjustments accordingly, while individual investors may not have the same level of expertise or resources. Therefore, individual junk bonds are generally considered riskier than junk bond mutual funds.

Individual Junk Bonds Are Riskier Than Junk Bond Mutual Funds