When an investor looks into corporate bonds, they should never weigh out the possibility that the company may default on the debt.Select one:TrueFalse
Question
When an investor looks into corporate bonds, they should never weigh out the possibility that the company may default on the debt.
Select one:
- True
- False
Solution
The statement "When an investor looks into corporate bonds, they should never weigh out the possibility that the company may default on the debt" is False.
Explanation:
-
Default Risk: Investors should always consider the risk of default when investing in corporate bonds. Default occurs when a company fails to meet its debt obligations.
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Investing Strategy: Proper due diligence includes assessing the financial health of the issuing company, including its credit rating and history.
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Risk Management: Acknowledging the possibility of default is crucial for managing investment risks.
Therefore, it is important for investors to weigh the possibility of default when considering corporate bonds.
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