What is a Junk Bond? Junk bonds, or high-yield bonds, carry a higher default risk than investment-grade bonds. They're issued by companies or governments with lower credit ratings, increasing the chance of debt obligations not being met, but at the same time, it offers the possibility for higher returns.
While the return can be appealing, junk bonds are more vulnerable to economic downturns and defaults, potentially causing losses for bondholders.
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