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What happens to junk bonds in a recession?
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- What is the role of the Federal Reserve with interest rates during a recession?Are interest rates of junk bonds always higher or lower than investment-grade bonds? Why?if we see an increase in default rates, what may that mean for the junk bond market and for companies that want/need to sell more junk bonds?
- How would a financial institution with a large bond portfolio be affected by falling interest rates? Would it be affected by a greater degree than a financial institution with a greater concentration of bonds (and fewer short-term securities)?Why are investment-grade bonds more marketable and why are junk bonds issued at all?Why are U.S. Treasury bonds not completely riskless?