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:

Maximizing Profits

The process of adjusting inputs and outputs in production or service delivery to achieve the highest possible financial gain.

Revenue Per Bushel

The amount of money generated for each bushel of a commodity sold, commonly used in agriculture.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining these activities.

Farmer

A person involved in farming, cultivating live entities for consumption or base materials.