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

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Danielle Eaton

Biology

17 January, 22:21

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

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Maddox Conrad · 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.