Which statement(s) is (are) true?

I. High-yield companies may borrow money in the high-yield commercial paper market, although their borrowing cost will be much higher than investment-grade companies.

II. Sovereign defaults never happen.

Correct Answer: Both are false.

I. There is no high-yield commercial paper market.

II. A sovereign default is the failure or refusal of the government of a sovereign state to pay back its debt in full.