Correct option is "A) junk bond" Junk bond have highest default risk, junk bond have highest interest rate bond which have higher risk premium bond and bond which have higher interest rate have higher risk, junk bond are non-investment grade bond, there credit rating is so poor which make this bond higher default risk
15) Which of the following bonds have the highest default risk? A. Credit spread on the bond is 20% B. Credit spread on the bond is 14% C. Credit spread on the bond is 12% D. Credit spread on the bond is 0%. 16) Luckout Ltd has a beta of 2.0 and an expected return of 20 percent.
May 07, 2017 · 19) Which of the following bonds would have the highest default risk? A) Municipal bonds B) Investment-grade bonds C) U.S. Treasury bonds D) Junk bonds D ) junk bonds
Junk bonds or high-yield bonds are corporate bonds from companies that have a big chance of defaulting. They offer higher interest rates to compensate for the risk.
Default risk is the possibility that a bond's issuer will go bankrupt and will be unable to pay its obligations in a timely manner if at all. If the bond issuer defaults, the investor can lose part or all of the original investment and any interest that was owed.
Treasury bonds are sold by the federal government. Because they are backed by Uncle Sam, Treasurys have practically no default risk and are the safest bonds to buy. Short-term Treasurys are sold with maturities ranging from a few weeks to 30 years. Treasurys are usually sold with a face value of $1,000.Dec 12, 2019
Savings, CDs, Money Market Accounts, and Bonds Some that are considered the safest also generate the least interest (or returns). The investment type that typically carries the least risk is a savings account. CDs, bonds, and money market accounts could be grouped in as the least risky investment types around.May 6, 2021
Default probability is the likelihood a borrower will fail to meet their repayment schedule on a loan or debt. If a borrower is determined to have a high default probability, they will likely have to pay higher interest rates on the loan.Sep 28, 2021
The default risk premium is essentially the anticipated return on a bond minus the return a similar risk-free investment would offer. To calculate a bond's default risk premium, subtract the rate of return for a risk-free bond from the rate of return of the corporate bond you wish to purchase.Nov 2, 2016
Investment Products All have higher risks and potentially higher returns than savings products. Over many decades, the investment that has provided the highest average rate of return has been stocks. But there are no guarantees of profits when you buy stock, which makes stock one of the most risky investments.
Q.Which of the following is least risky:B.Corporate BondsC.Treasury BillsD.Certificate of DepositsAnswer» c. Treasury Bills1 more row
one key risk to a bondholder is that the company may fail to make timely payments of interest or principal. If that happens, the company will default on its bonds. this “default risk” makes the creditworthiness of the company—that is, its ability to pay its debt obligations on time—an important concern to bondholders.
Here are the best High Yield Bond fundsRBC BlueBay High Yield Bond Fund.PIA High Yield (MACS) Fund.Federated Hermes High-Yield Strat Port.SEI High Yield Bond (SIIT) Fund.BrandywineGLOBAL - Corporate Credit Fund.SEI High Yield Bond (SIMT) Fund.Fidelity® Capital & Income Fund.
Risk Considerations: The primary risks associated with corporate bonds are credit risk, interest rate risk, and market risk. In addition, some corporate bonds can be called for redemption by the issuer and have their principal repaid prior to the maturity date.
Here are the best low-risk investments in April 2022:Short-term certificates of deposit.Money market funds.Treasury bills, notes, bonds and TIPS.Corporate bonds.Dividend-paying stocks.Preferred stocks.Money market accounts.Fixed annuities.More items...•Apr 1, 2022