ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -High-yield bonds are debt securities, also known as junk bonds, that are issued by corporations. They can provide a higher yield than investment-grade bonds, but they are also riskier investments.

Detailed explanation-2: -Bonds rated below Baa3 by ratings agency Moody’s or below BBB by Standard & Poor’s and Fitch Ratings are considered “speculative grade” or high-yield bonds. Sometimes also called junk bonds, these bonds offer higher interest rates to attract investors and compensate for the higher level of risk.

Detailed explanation-3: -Junk bonds or high-yield bonds are corporate bonds from companies that have a big chance of defaulting. They offer higher interest rates to compensate for the risk.

Detailed explanation-4: -Junk bonds are riskier than investment-grade bonds because they’re issued by companies that are on less stable financial footing. They have higher default rates than investment-grade bonds. Liquidity.

Detailed explanation-5: -Junk bonds carry a higher risk of default than other bonds, but they pay higher returns to make them attractive to investors. The main issuers of such bonds are capital-intensive companies with high debt ratios, or young companies that have yet to establish a strong credit rating.