What Is a Junk Bond?
The label depends on the grade, not on the industry.
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1.What is a junk bond?
The label depends on the grade, not on the industry.
2.Below which grade at S and P and Fitch does a bond count as high yield?
At Moody's the same line sits below Baa3.
3.Why does a junk bond promise a higher interest rate?
Think of it as a price tag on risk: the higher the risk, the higher the promised interest.
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Sources (5)
- FINRA, What to Know Before Saying Hi to High-Yield Bonds (17. January 2023)
- SEC/Investor.gov, Updated Investor Bulletin: The ABCs of Credit Ratings
- Jefferis, Richard H., Jr.: The High-Yield Debt Market: 1980-1990, Federal Reserve Bank of Cleveland, Economic Commentary, 1. April 1990
- Yago, Glenn: Junk Bonds, in: Concise Encyclopedia of Economics (Library of Economics and Liberty, econlib.org), ohne Datum
- Eigene Rechnung: Zehn-Anleihen-Rechenbeispiel (synthetisch)
Education only. Not financial advice.