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They also have high risk.
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What type of bond has the highest risk?
High risk bonds are called junk bonds.
Why junk bonds pay a higher interest rate than government bonds of similar maturity?
Interest rates increase as perceived risk increases. Government bonds have virtually no risk. Junk bonds are so called because they carry a high risk of default.
When a bonds yield to maturity is greater than the bonds coupon rate the bond?
When the yield of a bond exceeds it coupon rate, the price will be below 'par' which is usually $100.
Will a call provision increase or decrease the yield to maturity at which a firm can issue a bond?
Callable bonds will pay a higher yield than comparable non-callable bonds. Take from answers.com
What must be held constant among bonds whose interest rates are shown on a yield curve?
What must be held constant among the bonds whose interest rates are shown on yield curve
What word often describes high-yield bonds?
Junk
What is the percentage of returns for high yield investments?
High-yield investments, also called "junk bonds", are bonds at risk of default or other problems, but have higher returns. This makes them risky but potentially rewarding. Junk bonds provide an average return of between 5 and 6 percent as of spring 2013.
What are the risks and benefits of buying junk bonds?
One advantage of purchasing junk bonds is it allows one to diversify investments over a larger group of different assets. The biggest benefit is they carry a high yield. However, junk bonds are also very high risk.
What do I need to know about high yield investments?
Yes, high yield investments which are also called junk bonds, are quite risky and that is why they pay higher yields. Safer investments will have lower yields, and include AAA and AA rated corporate bonds, government bonds, as well as Certificates of Deposit (CDs) among others.
What is the difference between junk bonds and traditional bonds?
A junk bond is any bond with a BB or below rating. Also called high-yield bonds, they can become this way following one of two paths. In the days before Michael Milken, investment-grade bonds became junk because of various downturns in a company's fortune. Milken's great innovation, the one that made him so rich he could pay a billion dollars in fines to the federal government and still be rich, was creating bonds that started out life as high-yield paper.
Why would a person invest in junk bonds-?
"Junk" bonds pay a higher interest rate than high-quality bonds, in order to compensate for the risk of default. junk bonds can pay very high interest rates (gradpoint)
Where can one find high yield municipal bonds?
Someone that is looking for information on high yield municipal bonds, can do so by researching with websites such as About, Wikipedia, as well as Learn Bonds.
What is a high yield savings bond?
High Yield Savings Bond describes bonds that have high rates of return. These bonds are usually ranked low as they have a higher chance of defaulting.
What are the benefits of high yield bonds?
The best benefits of high yield bonds are they are issued by low credit organizations, they are a leading agency, and they work to protect your debt .
What is a high yield bond fund?
High yield bond ( Junk bonds) funds own the debt of companies with less than stellar credit. The yield is higher to compensate the the increased risk that the fund and its investors are more likely to lose money as compared to a bond fund holding higher rated debt.
What is the risk involved with high yield bonds?
The major risk with high yield bonds is losing all of your money you invest. These type of bonds have a very low rating much lower that the investment grade.
What type of bond has the highest risk?
High risk bonds are called junk bonds.
