SIE practice questioneasyCredit (Default) Risk
Credit risk is MOST relevant to investors in:
- AU.S. Treasury securities
- BFDIC-insured bank deposits
- CCommon stocks of blue-chip companies
- DHigh-yield (junk) corporate bonds✓ Correct answer
Explanation
Why D — High-yield (junk) corporate bonds
Credit risk is the risk that a bond issuer will fail to make interest or principal payments. High-yield (junk) bonds carry the highest credit risk because they are issued by companies with lower credit ratings (BB/Ba or below). Treasuries (A) have virtually no credit risk. FDIC deposits (D) are insured. Stocks (B) have business risk but not traditional credit/default risk in the same way bonds do.
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