Question

Junk bonds are high-risk, high-yield debt instruments. They are often used to finance leveraged buyouts and mergers, and to provide financing to companies of questionable financial strength.
O True
O False

Answer 1

Answer:

true              

Explanation:

Junk bonds can be defined as the bonds that require a higher default risk than most corporate and government issued bonds. A bond is indeed a debt or promise to pay interest payments to investors in return for purchasing the bond and the return of the invested principal.

Junk bonds depict debt issued by financially struggling companies with a significant risk to defaulting or failing to pay even their own monthly payments or reimbursing the principal to lenders. Thus, from the above we can conclude that the given statement is true.