Which of the following statements refers to junk bonds?
It is a debenture or bond that is not backed by specific collateral.
It is a bond that is backed by specific collateral that must be forfeited in the event that the issuing firm defaults.
It is a sequence of small bond issues of progressively longer maturity.
It is a bond with interest rates that change with current interest rates otherwise available in the economy.
It is a special type of high interest-rate bond that carries higher inherent risks.
Answer: It is a special type of high interest-rate bond that carries higher inherent risks.