The Success of Junk Bonds in the 1980s Was Based

question 35

Multiple Choice

The success of junk bonds in the 1980s was based on a rationale that was eventually proven wrong. That rationale was:

• A)the failure rate of risky companies is only slightly higher than that of more reputable firms.
• B)risky firms fail only slightly more often than highly rated firms in good economic times.
• C)during hard times, risky companies fail a lot more frequently than higher rated firms.
• D)None of the above correctly states the junk bond rationale.

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Definitions:

Teff

A grain native to Ethiopia and Eritrea, known for its nutritional properties and used to make traditional dishes like injera.

Newsprint

A low-cost, non-archival paper commonly used for newspapers and other publications.

Supply

The total amount of a specific good or service that is available to consumers, usually determined by price, production costs, and market demand.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.