Multiple Choice QuestionAnother word for high-yield bonds is Blank______.Multiple choice question.promise bondsjunk bondsmunicipal bondscoupon bonds

Break Down the Problem

1. Identify the definitions of the terms provided in the options.
2. Determine which term is commonly used as a synonym for high-yield bonds.

Relevant Concepts

• High-yield bonds: These are bonds that offer higher returns (or yields) compared to other bonds, typically because they carry a higher risk of issuer default.
• Common synonyms for high-yield bonds include terms that denote their risk and return characteristics.

Analysis and Detail

1. Promise bonds: This term is not commonly used in finance to describe high-yield bonds.
2. Junk bonds: This term is frequently used as a synonym for high-yield bonds since these bonds have lower credit ratings and are riskier investments.
3. Municipal bonds: These are bonds issued by local governments or municipalities, usually with lower yields and less risk compared to high-yield bonds.
4. Coupon bonds: This term refers to bonds that pay periodic interest payments, not specifically tied to high-yield characteristics.

Verify and Summarize

Among the given options, "junk bonds" is the correct term that aligns with the definition of high-yield bonds due to their high risk and high return nature.

Final Answer

Junk bonds