Description: High-yield corporate bonds are being priced as if few of these companies are going out of business, evidence that income-seeking investors are increasingly accepting the greater risks attached to low-rated debt.
Questions for discussion:
- Summarize the current market conditions for corporate bonds.
- How should financial managers deal with these conditions?Â
- How would you advise investors?Â
- Do you agree with the statement that “Investors are willing to lower their standards” of how much protection a bond offers in order to improve returns? Explain your thinking.