Mitigating Credit Risk in Bond Investments

Very Easy Risk Management Credit Risk Management

Samantha is a financial advisor working with high-net-worth clients. One of her clients is interested in investing in corporate bonds and is concerned about the risk of default. To mitigate credit risk, which of the following strategies should Samantha recommend to her client?

Invest exclusively in high-yield corporate bonds.

Diverse their bond portfolio across various industries and credit ratings.

Only invest in bonds issued by government entities.

Hint

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