Junk bond
A bond rated below investment grade. Higher interest for higher risk of not being paid.
Where it is explained in full
Bonds and Treasuries: lending money, with a price that moves. A bond is a loan you make. The interest is fixed, the price is not, and the relationship between the two confuses nearly everyone the first time.
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Words beside it
- bond fund
A pool of money collected from many investors that a fund company uses to buy a large number of different bonds at once. You own a small slice of that whole pool instead of one single bond.
- Bond ladder
Bonds maturing in successive years so some money comes due regularly.
- bondholder
A bondholder is the person or group that owns a bond, meaning they are the ones who lent money to a company or government. They receive interest payments and get their money back at the end of the loan period.
- corporate bond
A loan you give directly to a company instead of a government, and the company promises to pay you back with interest over a set period of time.
- I bond
A savings bond whose rate adjusts with inflation, bought from the Treasury.
- Municipal bond
A bond from a state or city, usually free of federal tax on its interest.
Ask about Junk bond
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