Multiple choice

JUNK BONDS are

  1. High yield, high risk

  2. Low yield, high risk

  3. Low yield, low risk

  4. High yield, low risk
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A Correct answer
Explanation

Junk bonds are high-yield securities issued by companies with poor credit ratings or financial instability. Investors demand higher returns to compensate for the elevated risk of default. Low-risk bonds (like government securities) offer lower yields, while high-yield junk bonds carry significant risk.

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