Question: What Are Junk Bonds?
Answer: Junk bonds are corporate bonds that are least safe. They have been rated as “not investment grade” by Standard & Poor's or Moody's because the company is not fiscally sound. Therefore, they tend to have the highest return for bonds to compensate for the additional risk. This is why they are also known as high yield bonds. Investors often add some high yield bonds to their bond portfolio to gain higher returns than regular bonds without the higher volatility of stocks. You can purchase high yield bonds either individually or through a high yield fund through your financial advisor. (Source: Investing in Bonds.com).
