Why do bonds with lower seniority have higher yields than equivalent bonds with higher seniority?

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Biology

Marcos Powers

18 January, 13:57

Why do bonds with lower seniority have higher yields than equivalent bonds with higher seniority?

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Hallie Boyle · Answer 1

Why do bonds with lower seniority have higher yields than equivalent bonds with higher seniority because Bonds with lower seniority are paid after bonds with higher seniority, so there is more of a risk associated with lower seniority bonds, thus, a higher return is required.