The change in ‘yield to maturity’ for a high risk company will most likely be ________________ than for a low risk company.

Higher.

Higher

The change in 'yield to maturity' for a high risk company will most likely be higher than for a low risk company.

To understand why this is the case, let's start by defining 'yield to maturity.' Yield to maturity (YTM) is the total return an investor can expect to receive from a bond if they hold it until it matures. It takes into account the bond's current price, its face value, the coupon payments, and the time remaining until maturity.

When it comes to risk, a high risk company implies that it has a higher probability of defaulting on its obligations compared to a low risk company. Investors perceive high-risk companies as having a greater chance of failing to make interest payments or repay the principal amount at maturity.

Because of this higher risk, investors will demand a higher return to compensate them for taking on the additional risk. Consequently, the market price of bonds issued by high-risk companies will decrease, resulting in an increase in the yield to maturity. This increase in yield is meant to reflect the higher compensation required by investors to invest in the bond.

In contrast, low-risk companies are considered more stable and have a lower probability of default. Hence, investors are willing to accept a lower return, resulting in a lower yield to maturity on their bonds.

Overall, the change in yield to maturity for a high risk company will be greater than for a low risk company due to the higher risk associated with higher-risk bonds.