Question

When allison researches 30-year fixed-interest bonds to invest in for retirement, she finds the coupons listed below. which bond is the least likely to be at risk of default? assume the bonds are the same in all respects except for their coupons. issuercoupon (% per annum)city of chicago, il5.00district of columbia5.25port authority of new york & new jersey4.25state of california5.75

Answer 1

The bond with the lowest probability of default risk is that of the Port Authority of New York and New Jersey, because it is the one that pays the least amount of interest. As is known, the greater the interest, the greater the risk, so in this case the amount of probability of reaching default is lower than in the other options.

Answer 2

The bond that is the least likely to be at risk of default is the Port Authority of New York & New Jersey. The correct answer between all the choices given is the third choice. I am hoping that this answer has satisfied your query and it will be able to help you in your endeavor, and if you would like, feel free to ask another question.