High-yield (junk) bonds

Bonds with below-investment-grade credit ratings. Their promised yields may compensate investors for greater credit and other risks, but promised compensation is not a guaranteed realized return.

High-yield (junk) bonds in round numbers

Hypothetical issue terms: one bond has a 9% annual coupon and another has a 4% annual coupon. These assumed rates are not current market quotes. Coupon is based on face value; current yield and yield to maturity also depend on price and the relevant payment assumptions.

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