Corporate Bonds
The PRIMARY risk of investing in bonds issued by a start-up company is:
Start-up bonds = high credit/default risk. Unproven companies may not pay back debt.
Complete Analysis & Legal Rationale
The primary risk of start-up company bonds is credit or default risk - the risk that the company will be unable to make interest payments or repay principal. Start-ups have unproven business models and uncertain cash flows.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Interest rate risk affects all bonds but is not the primary concern for start-up debt.
Reinvestment risk applies to all bonds but is secondary to default concerns.
Matches the verified teaching point in the explanation.
Currency risk applies to foreign investments, not specifically start-up bonds.
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.