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Junk bond (view source)

Revision as of 18:21, June 30, 2017

587 bytes added ,  18:21, June 30, 2017
Created page with "A '''junk bond''' is a risky, interest-bearing investment that pays a high rate of return in order to compensate for the likelihood of default (non-payment). The credit ratin..."
A '''junk bond''' is a risky, interest-bearing investment that pays a high rate of return in order to compensate for the likelihood of default (non-payment).

The credit rating of junk bonds are no better than "Ba" by [[Moody's]] Investors Service, or "BB" by [[Standard and Poor's]].

These investments are called "junk" because the companies are on the brink of insolvency or bankruptcy. However, the high yields paid by junk bonds provide compensation for that high risk, and the investment may become a profitable one, particularly if the [[economy]] improves.
[[category:finance]]
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