Speculative-Grade Bonds Have Default Risk; Investment Grade Bonds Do Not

question 2

True/False

Speculative-grade bonds have default risk; investment grade bonds do not.

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Definitions:

Corporate Bonds

Debt securities issued by corporations to finance their operations, expansions, or projects, which pay fixed or variable interest rates to investors.

Yield To Maturity

A measure of the annualized return anticipated on a bond if the bond is held until its maturity date, accounting for current market price, par value, coupon interest rate, and time to maturity.

Par Value

A nominal value assigned to a security or company stock, serving as the minimum price at which the security can initially be sold.

Coupon Payment

Dollar amount of interest paid to each bondholder on the interest payment dates.