Which of the Following Statements About Junk (High-Risk)bonds Is TRUE

question 29

Multiple Choice

Which of the following statements about junk (high-risk) bonds is TRUE?

• A) They never outperform treasury bonds since they're too risky.
• B) The price of junk bonds increases as their perceived risk increases.
• C) They tend to perform best during recessions.
• D) One can profit by owning them if market perceptions of their risk decline.

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Definitions:

Nation Bank

Likely a typographical error, but if referring to "National Bank," then it's a commercial bank chartered by the federal government in the United States.

Good Faith Purchaser

A Good Faith Purchaser is someone who buys property without knowledge of any prior claims, disputes, or flaws related to the property, thereby obtaining legal ownership.

Holder In Due Course

A legal term referring to a person who has acquired a negotiable instrument in good faith and for value, and thus has certain rights above the original payee.

Acceptor

The person (the drawee) who accepts a draft and who agrees to be primarily responsible for its payment.