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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 to compensate for the increased risk.
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 ...
High-yield bonds (or junk bonds) are known for being high-risk, yet potentially high-reward, investments. They are usually offered by companies with little positive reputation, such as startups ...
Bonds with ratings below a certain threshold are considered non-investment grade, or high-yield. High-yield bonds are also referred to as junk bonds because of their lower credit quality, which ...
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:
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. 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 ...
Current Yield – But now consider how yield changes if the price of that same bond falls. If the bond mentioned above is resold for $800 it results in a current yield of 6.25%.