What Is the Most Common Purpose for Which Junk Bonds

question 23

Multiple Choice

What is the most common purpose for which junk bonds are used?

• A) To finance hostile takeovers.
• B) By investors who require an instrument that falls between debt and common shares in terms of risk and return.
• C) To finance reverse take-overs, where a smaller business is acquiring a larger one.
• D) By investors who require a high return option for portfolio diversification.
• E) To finance a business whose credit is below an investment grade rating.

---

Definitions:

Integumentary

Pertaining to the skin and its appendages, functioning in protection, sensation, and regulation.

Ultraviolet Radiation

A type of electromagnetic radiation coming from the sun and some artificial sources, which can have both beneficial and harmful effects on human health.

Physical Carcinogen

A substance, material, or exposure that physically causes cancer, typically through direct physical damage to DNA.

Smokeless Tobacco

Tobacco products that are not burned but used in other forms such as chewing tobacco or snuff, posing health risks such as cancer and dental disease.