Which of the Following Bonds Carry Significant Risk That the Issuer

question 39

Multiple Choice

Which of the following bonds carry significant risk that the issuer will not make current or future payments?

• A) Credit quality risk bonds
• B) Interest rate risk bonds
• C) Liquidity rate risk bonds
• D) Junk bonds

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Definitions:

Legal Detriment

A loss or disadvantage that occurs as a result of a contract or agreement, serving as consideration for a promise in contract law.

Firm Offer

In contract law, a proposal made by a seller to supply goods or services at a fixed price, which cannot be withdrawn for a certain period.

Consideration

Something of value exchanged between parties in a contract that induces them to enter into the agreement.

Bargained-For Exchange

An exchange of promises or performance by parties to a contract that provides the consideration necessary to make the contract legally enforceable.