Which of the following describes a bond's credit risk? O The probability that financially sound corporations raise money by issuing junk bonds, which pay very high interest rates O The probability that the borrower will fail to pay some of the interest or principal O The probability that the bond owners will not be required to pay federal income tax on the interest income O The fact that long-term bonds are riskier than short-term bonds because holders of long-term bonds have to wait longer for repayment of principal
Which of the following describes a bond's credit risk? O The probability that financially sound corporations raise money by issuing junk bonds, which pay very high interest rates O The probability that the borrower will fail to pay some of the interest or principal O The probability that the bond owners will not be required to pay federal income tax on the interest income O The fact that long-term bonds are riskier than short-term bonds because holders of long-term bonds have to wait longer for repayment of principal
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Which of the following describes a bond's credit risk?
O The probability that financially sound corporations raise money by issuing junk bonds, which pay very high interest rates
The probability that the borrower will fail to pay some of the interest or principal
The probability that the bond owners will not be required to pay federal income tax on the interest income
The fact that long-term bonds are riskier than short-term bonds because holders of long-term bonds have to wait longer for repayment
of principal
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