Financial Planner

Answer: C - High-yield bonds are often issued to finance a takeover and merger or to help a start-up firm raise capital. These securities are often referred to as “junk” bonds; they are low quality, speculative grade, and usually rated below triple B. The features are the same as investment grade debt. However, the poor quality means they offer higher yields than investment grade debt. Triple B or better is generally considered investment grade. High-yield securities often have a call feature and sinking fund. They are usually debentures and may be subordinated to a firm’s other debt. However, some high-yield securities have collateral.