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- DictionaryHigh-yield·ing
adjective
- 1. producing a large amount of a product or a large financial return: "high-yielding grain crops"
High-yield is an adjective that describes bonds, shares, or other investments that pay a lot of interest or dividends, often with a high level of risk. Learn more about the meaning, usage, and pronunciation of high-yield with examples from the Cambridge Dictionary and Corpus.
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High-yield means high-yielding and describes bonds, shares, or other investments that pay a lot of interest or dividends, often with high risk. Learn more about the meaning, usage, and pronunciation of high-yield with examples from various sources.
Mar 10, 2022 · High-yield bond definition. High-yield corporate bonds — also called “junk bonds” or “non-investment grade bonds” — are debt obligations issued by companies looking to raise capital, and...
- What Are High-Yield Bonds?
- Characteristics of High-Yield Bonds
- Types of High-Yield Bonds
- Investing in High-Yield Bonds
High-yield bonds, also known as junk bonds or speculative bonds, are debt securities issued by companies with lower credit ratings than investment-grade bonds. These bonds offer investors higher yields due to their higher risk profile, but they also have the potential for significant returns. These bonds can offer attractive returns to investors wi...
Credit Ratings
Credit ratings are an essential factor in determining the risk associated with a bond. Rating agencies such as Standard & Poor's, Moody's, and Fitch Ratings assign credit ratings to companies and their debt securities. These ratings are based on a scale that ranges from AAA(highest quality) to D (default). High-yield bonds typically have credit ratings of BB or lower. These ratings are assigned based on the agency’s assessment of the issuer's financial strength and ability to meet debt obliga...
Risk and Return
High-yield bonds carry risks that investors should consider before investing: 1. Default Risk: High-yield bonds are more likely to default compared to investment-grade bonds due to the issuing company's lower credit quality. Investors can manage default risk in high-yield bond portfolios by diversifying across issuers, industries, and credit ratings. This diversification can help reduce the impact of individual bond defaults on overall portfolio performance. 2. Interest Rate Risk: High-yield...
Maturity and Duration
High-yield bonds can have varying maturities, from short-term (less than three years) to long-term (more than ten years). Bond duration, which measures a bond's sensitivity to interest rate changes, is also an essential factor to consider when investing in high-yield bonds.
Corporate Bonds
High-yield corporate bondsare issued by companies with lower credit ratings. These bonds often provide higher yields to compensate investors for the higher risk associated with the issuer.
Convertible Bonds
Convertible bonds are a hybrid security that can be converted into a predetermined number of the issuer's common stock shares. These bonds offer the potential for capital appreciation if the underlying stock price increases while also providing a fixed income stream.
Distressed Debt
Distressed debt refers to bonds issued by companies experiencing financial difficulties or facing bankruptcy. These bonds can offer significant returns if the company recovers, but they also carry a high risk of default.
Pros and Cons of Investing in High-Yield Bonds
Investing in high-yield bonds can offer several advantages, including higher yields, diversification benefits, and the potential for capital appreciation. However, investors should also be aware of the risks associated with high-yield bonds, such as default, interest rate, and liquidity risks.
Individual Bond Selection
When selecting high-yield bonds for investment, investors should consider the following factors:
Aug 11, 2023 · High-yield bonds are corporate debt securities that pay higher interest rates than investment-grade bonds, but they are also riskier investments. Learn about the advantages, disadvantages, and risks of high-yield bonds, and how to invest in them through funds or individual bonds.
Nov 27, 2023 · Yield refers to the income generated by an investment over a period of time, expressed as a percentage of the invested amount, market value, or face value of the security. It includes both interest earned, such as from bonds, and dividends received, such as from stocks.
Sep 16, 2021 · You are paid out based on a rate that is stable over a period, which is something equity investments do not guarantee. Because you're not concerned with day-to-day profits when investing in a bond,...
