1. What is a junk bond? 2. Are leveraged loans a kind of bond? Explain. 3....
1. What is a junk bond?
2. Are leveraged loans a kind of bond? Explain.
3. Why did leveraged loans become popular after the financial crisis?
4. What is it about Federal Reserve policy that is potentially causing problems for leveraged loans?
5. In what ways is this like the subprime mortgage crisis? In what ways is it different?
6. If you were the Fed, would you be very worried about raising interest rates? Why?
Homework Answers
Answer 1 - Junk bond is the type of bond which is issued by the companies which have the high risk of non payment. These bonds are also called the high yield bonds because the companies try to attract the investors by giving them higher returns because the investors know that these companies are likely to commit a default on repayment. The returns are this much high because of higher risk of non repayment .
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1. What is a junk bond?
2. Are leveraged loans a kind of bond? Explain.
3....
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