1. Investors expect that the return on a risky bond to an investor will be higher than the return on bonds with less risk.
They enjoy the thrill of the gamble of investing in risky bonds and when these bonds perform well. However, investors must understand that risky bonds are more likely to default than safer bonds. Describe your behavior toward buying risky bonds.
2. Read one practical article about how psychology affects decisions when buying bonds on margin. You can easily retrieve possible articles by doing an online search using the terms “psychology” and “buying risky bonds.” Summarize the main points of the article.
Investors expect that the return on a risky bond to an investor will be higher than the return on bonds with less risk.