Destiny prefers investments that offer the highest possible returns, even if they are risky. Which of the following bonds is Destiny most likely to be interested in?

O junk bonds
O municipal bonds
O corporate bonds
O savings bonds

Respuesta :

Based on Destiny's preference for investments with the highest returns without consideration of their riskiness, he will most likely be interested in A. junk bonds.

  • Junk bonds issued by corporate entities lack investment-grade credit ratings. They usually yield higher returns than the average bonds with good investment-grade credit ratings.

  • Destiny will not be interested in municipal bonds because they do not meet his high-risk appetite.  Municipal bonds do not yield high returns. They are for the risk-averse investor.

  • Destiny will not be interested in corporate bonds with investment-grade credit ratings because they are more secured and less risky than junk bonds.

  • Finally, savings bonds will not be attractive to Destiny, as the U.S. Treasury issues them and they remain the safest investments.

Thus, Destiny's interest will be in junk bonds because he does not mind the risks but wants the highest returns from his investments.

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