Which of the Following Bonds Is Most Likely to Default

question 29

Multiple Choice

Which of the following bonds is most likely to default?

• A)a junk bond
• B)a municipal bond
• C)a federal government bond
• D)a corporate bond issued by Tim Hortons

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Definitions:

NPV

Net Present Value; a calculation used to determine the worth of a project or investment by discounting future cash flows to the present.

Refunding Decision

The process of replacing an existing debt with a new one, typically with better terms, in order to reduce financing costs.

Canadian Securities Industry

The sector encompassing firms and regulations in Canada involved in issuing, trading, and managing securities and investments.

Unregulated

Lacking regulatory restrictions within a particular industry or activity.