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?
a- savings bonds
b- junk bonds
c- corporate bonds
d- municipal bonds
Destiny is most likely to be interested in junk bonds. Junk bonds are high-risk, high-yield bonds that offer the potential for higher returns compared to other types of bonds. Since Destiny prefers investments that offer the highest possible returns, even if they are risky, junk bonds align with her investment preference.
Destiny, who prefers investments with high returns even if they are risky, is most likely to be interested in "junk bonds" (option b). Junk bonds are a type of high-yield bond that carries a greater risk of default compared to other types of bonds. They typically offer higher interest rates to compensate for the higher risk involved.
Destiny, who prefers investments with the highest possible returns, even if they are risky, would most likely be interested in junk bonds out of the options provided.
To understand why, let's examine each option:
a) Savings bonds generally offer lower returns compared to other types of bonds but are considered safer due to being issued by the government. They are less likely to fit Destiny's preference for high-risk, high-return investments.
b) Junk bonds, on the other hand, are bonds issued by companies or municipalities with lower credit ratings. Although they are considered riskier compared to other bonds, they typically offer higher yields or returns. Since Destiny is willing to accept a higher level of risk, junk bonds could align with their investment preference.
c) Corporate bonds are debt securities issued by corporations. While they may offer higher returns than savings bonds, they are typically considered less risky than junk bonds. Therefore, corporate bonds might not provide the level of risk that Destiny seeks.
d) Municipal bonds are issued by local governments or municipalities. They are generally considered relatively safe investments since they are supported by the taxing power of the issuing government entity. However, they may have lower returns compared to junk bonds, making them less attractive to someone like Destiny who prioritizes high returns.
Based on the provided options and Destiny's preference for high returns, even if they are risky, junk bonds would likely be the most appealing choice.