Junk Bonds

Junk bonds are a type of high-risk, high-yield investment issued by companies with lower credit ratings. Because these companies may struggle to pay back their debt, junk bonds offer higher interest rates to attract investors willing to take on the risk. While they can provide significant returns if the issuing company performs well, they also carry a greater chance of default, meaning the company could fail to make interest payments or repay the principal. Investors in junk bonds must carefully consider their risk tolerance and investment strategy.