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In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for the increased risk.
The current yield, interest yield, income yield, flat yield, market yield, mark to market yield or running yield is a financial term used in reference to bonds and other fixed-interest securities such as gilts. It is the ratio of the annual interest payment and the bond's price:
Junk bonds are a high-risk investment, but they offer the potential for higher returns than investment-grade bonds. Junk bonds, also known as high-yield bonds, are best suited for investors who ...
Investment-grade bonds. High-yield bonds. Income potential . Consistent yields. Higher yields. Growth opportunity. Potential long-term stability. Potential for capital gains and appreciation if ...
High-yield bonds. Sometimes referred to as junk bonds, high-yield bonds offer higher interest rates to investors because they are considered greater credit risks than investment-grade bonds. High ...
For example, if a risk-free 10-year Treasury note is currently yielding 5% while junk bonds with the same duration are averaging 7%, then the spread between Treasuries and junk bonds is 2%. If that spread widens to 4% (increasing the junk bond yield to 9%), then the market is forecasting a greater risk of default, probably because of weaker ...
High-yield bonds: High-yield bonds are also referred to as “junk bonds,” and they are viewed as more risky, though not necessarily very high risk, depending on exactly the grade and financial ...
The bonds are purchased from the market at $985.50. Given that $2.00 pays the accrued interest, the remainder ($983.50) represents the underlying value of the bonds. The following table illustrates the values of these terms. The market convention for corporate bond prices assigns a quoted (clean price) of $983.50.