High-quality (high-rated) bonds provide lower returns than lower-quality (low-rated) bonds.

Question

Quizplus · Accepted Answer

This statement is true. High-quality bonds, also known as investment-grade bonds, are issued by financially stable companies or governments with a low risk of default. As a result, they offer lower returns. On the other hand, lower-quality (low-rated) bonds, also known as high-yield bonds or junk bonds, are issued by companies with higher credit risks and therefore offer higher returns to compensate for the increased risk.

High-Quality (High-Rated) Bonds Provide Lower Returns Than Lower-Quality (Low-Rated) Bonds