Junk bonds, also known as high-yield bonds or noninvestment-grade bonds, get their name because of their high default risk (i.e. inability to make required payments on debt obligations) relative to investment-grade bonds.
Junk bonds have a credit rating of BB or lower by S&B or Ba or lower by Moody’s.
Not only are junk bonds risky in that investors may never see a return on their investment, many junk bonds do not allow investors to cash out for one to two years.
If you have a low risk tolerance, a junk bond was likely an unsuitable investment for you. If you’ve lost money due to a broker’s negligence in recommending a junk bond, consult with an experienced lawyer who can review your case.
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