All Courses > Bonds > 200
Bonds 201: Junk Bonds

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Junk bonds are less affected by interest rate changes than other bonds because they tend to have longer maturities.
Choose wisely. There is only one correct answer.
False. Junk bonds are less affected by interest rate changes than other bonds because they tend to have shorter maturities.
2.
Low bond liquidity can lead to lower transaction costs.
Choose wisely. There is only one correct answer.
False. Low bond liquidity leads to higher trading costs.
3.
Bonds with the highest grade are rated _______.
Choose wisely. There is only one correct answer.
AAA. Bonds least likely to default are graded "AAA."
4.
In general, when interest rates _______, bond prices _______.
Choose wisely. There is only one correct answer.
Go down/increase. Bondholders can increase the prices of their bonds when interest rates fall, because their bonds will still have higher rates and will therefore be in demand.
5.
Credit analysis includes researching a company's entire industry.
Choose wisely. There is only one correct answer.
True. Looking at other companies in the same industry is part of credit analysis.