Bond Basics
What are bonds?
Debt securities issued by companies to raise money.
Another name for junk bonds are...
High-yield bonds
If interest rates rise, then bond prices will...
fall
What are credit rating agencies?
Agencies that evaluate the creditworthiness of bonds.
Startup or struggling companies.
What is a coupon?
Regular interest payment bondholders receive.
What does higher risk in junk bonds mean?
Bonds that offer higher interest rates.
Investors buy junk bonds in hopes for...
higher returns
A bond with high rating is...
safe or low risk
During economic downturns, bonds tend to perform...
poorly
What are junk bond?
Who usually issues junk bonds?
New or struggling companies
What is liquidity?
How easily a bond can be bought or sold.
How are credit ratings given?
Letter grades - BB or lower
Investors who accept higher risk for higher yield.