What Is the Most Common Purpose for Which Junk Bonds

Multiple Choice

What is the most common purpose for which junk bonds are used?

A) To finance hostile takeovers.
B) By investors who require an instrument that falls between debt and common shares in terms of risk and return.
C) To finance reverse take-overs, where a smaller business is acquiring a larger one.
D) By investors who require a high return option for portfolio diversification.
E) To finance a business whose credit is below an investment grade rating.