Summary of Junk Bonds

Junk bonds, also known as high-yield bonds, offer investors higher yields than more highly rated bonds in exchange for taking on greater default and liquidity risks. Because they have shorter maturities and higher yields, the prices of junk bonds on the secondary market are less affected by interest rates than the prices of most bonds. Before you take the plunge, you should carefully analyze both the credit and the industry of companies that are making high-yield bond issues.