Social Sciences and the Law

Why is a junk bond risk?

Link to this answer

CloseClose

Link to this answer

Share this credible answer with others. Simply paste this code into your blog or Web page:

<a href="http://qanda.encyclopedia.com/question/why-junk-bond-risk-124015.html" >Why is a junk bond risk?</a>
E-mail this answer Link to this answer

A junk bond has a risky credit rating because it is issued by companies without an established earnings history or with a questionable credit history. Junk bonds have increasingly been used to help finance the purchase of companies, especially in leveraged buyouts .

Answer verified with
Get more facts and information about bond . Or, view the full encyclopedia entry from The Columbia Encyclopedia, Sixth Edition.

Similar questions: Why do junk bonds have risky credit ratings? What makes a junk bond risk? What is the risk of junk bonds? [ Hide these questions ]

Related research questions

Related research articles

NOTHING WRONG WITH 'JUNK BONDS' BUT THEY INVOLVE RISKS
Newspaper article from: The Boston Globe ...high-interest "junk bonds" being issued...guess the "junk bonds" financing these...nothing wrong with junk bonds; they probably will...do involve certain risks. That's why the bond rating services do...more than the normal risk and some of ...
If you hate risk, scrap junk bonds.(Personal Growth)
Magazine article from: FOCUS: Journal for Respiratory Care & Sleep Medicine ...high-yield "junk" bonds. Ninety percent...term taxable bond funds last month went into junk bond funds. Even Warren...rally. "The junk bond market is very...higher degree of risk." These lower-quality bonds aren't assigned...dollar, which is why mutual ...
The Return of the Risk Trader: As client trading tails off as well as income...
Magazine article from: Investment Dealers' Digest ...Get ready for the next wave of risk trading. The image of a testosterone...debt crisis, in which trading risk played a huge role, further...anew. In short, though the risk trader of the new millennium...altogether. It's easy to see why. Though they can be hugely profitable...
An empirical test of the incentive effects of deposit insurance: the case of...
Magazine article from: Journal of Money, Credit & Banking ...implies that junk bonds increase the risk of deposits...institutions holding junk bonds are perceived...relationship between junk bond investments...equity market risk but: also that...holding junk bonds increases risk...then (1) why would ...
As rates rise, junk bonds lose luster.
Newspaper article from: Atlanta Journal-Constitution (Atlanta, GA) ...like, well, junk. More than...willing to take high risks. That's what...Companies in the junk bond market have to...The term "junk bond" is most closely...grade corporate bonds, Treasury bonds...sharply with junk bond returns of 28...in high-yield ...
See all results at HighBeam

HighBeam gives you access to newspaper, magazine, and trade journal articles plus press releases, facts, information, and biographies from thousands of sources.