What is a junk bond?

Scorp74 said: "I have heard the term. Does anyone know what it means?"

chahinemm said: "junk bonds are like normal bonds with higher risk with higher premium with potentially higher return yet its also to a level of higher speculative though so u have to be very werry choosing them... but if u choose the right one the return can be very lucrative. i hope that helps chahine"

AlfredSokol said: "[quote] Junk bonds are not a special type of bond; they are regular high-risk, low-rated bonds. These corporate bonds have ratings of BBB (Standard & Poor's) or Baa (Moody's Investor Services, Inc.) or less, which includes a range of poor-quality debt close to default. Some of the bonds have no rating. [/quote] This is from "All About Bonds and Bond Mutual Funds" by Esme Faerber."

HappyHarry said: "If you're interested in general info junk bonds, check out the info on [url=http://www.answers.com/topic/michael-milken]Michael Milken[/url] His use of junk bonds in the 1980s led to some of the biggest deals in the history of business."

lil dickie said: "Let's face it: sometimes junk bonds even pay off. Imagine people who have received 78.6% returns of bonds! You can see why the idea is attractive to people."

SanteeClause said: "did Someone say,Sometimes, they even pay Off ? Let a Pro tell ya ! the Term JUNK,Refers to the ABSENCE of rating, Not a BBB as someone on This forum sugjested ! Only a Fool would Believe that a Bond Rating could Protect investors ! the Rating System is Simply to Gauge the Tells you if a rating Agency, Thinks it's High or Low or Even Non-Rated ! Betcha ya didn't Know that You could issue Un-Rated Debt,Did ya ? and they Most Certainly Payed Off,Before the DEMS Made em ilegal for Pensions,Savings and Loans,Inssurance firms and others to Hold em ! Yes HappyHarry,you Got it Right ! Ask Mikey Milken ! the Guy was Framed ! Imagine that You as an Issuer or Other party involved,couldn't tel yer MOM, but a Guy in the Crapper that overHears you talking to an involved Paty, Can use the Very Same info that yer Mom's not Alowed to ! Imagine That ! Mikey don't Have to Imagine it ! that Punk Ivan Boskey Cried like a Baby, and Gave Mikey Up to Save his Own worthless Hide ! i Clead up Hide for ya! Junk Bonds were So Damn Good, that almost Nobody wanted a Treasury Bill ! After All,would You settle for a 4%-5% when a Junk Bond would Pay you,say 8%-12%-15% or More ? i didn't Think so ! So almost Overnight, the Dems Forced Holders of Junk,to DUMP em in order to Sell a T-Bill ! Yer Right,HappyHarry ! Ask Mikey ! He Single Handedly Built a $450 Billion Market, which was Responsible for the Largest Economic Development Jump the World had Ever Seen ! By the Way: Junk is Back in Vogue ! Getcha some ! SanteeClause"