Lower-Rated Bonds Offer Higher Returns Than Higher-Grade Bonds Because Their

question 114

Multiple Choice

Lower-rated bonds offer higher returns than higher-grade bonds because their:

• A)coupon interest rates steadily increase throughout their lives.
• B)risks are higher.
• C)maturity values are higher than their market values.
• D)returns are attractive to risk-averse investors.
• E)returns are tax free.

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Definitions:

Rescission

Rescission is the legal act of unmaking or terminating a contract, returning the parties involved to their positions prior to the contract's existence.

Restitution

The return of any property given up under a contract.

Absolute Obligation

A duty or responsibility that is not subject to any conditions and must be fulfilled under all circumstances.

Equitable Remedies

Court-enforced actions directed at a party in a civil lawsuit, aimed at correcting a legal wrong or injustices, such as orders for specific performance, injunctions, and rescissions.