Which bond is likely to have higher interest rate due to a higher default risk?
A)A share of stock issued by Apple.
B)A corporate bond issued by Apple.
C)A junk bond.
D)A U.S.government bond.

Question

Quizplus · Accepted Answer

Junk bonds are considered high-risk/high-yield investments and are issued by companies with a higher likelihood of defaulting on their debt. Therefore, they typically offer higher interest rates to compensate investors for the higher risk. A share of stock issued by Apple (A) does not have an interest rate as it represents ownership in the company. A corporate bond issued by Apple (B) would likely have a lower interest rate than a junk bond since it is considered more stable, and Apple has a low risk of defaulting. A U.S. government bond (D) is considered a low-risk investment since the government is highly unlikely to default on its debt, so it would have a lower interest rate than a junk bond.

Which Bond Is Likely to Have Higher Interest Rate Due