If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
Sentiment: NEGATIVE
The credit quality of junk bonds varies widely.
In principle, junk bonds are basically useful, but they are used excessively and irrationally, notably in takeovers.
The best thing I have are 5 percent bonds from 1780, denominated from $1 to $20. As far as I can tell, they are obligations from the United States of America, so I should be able to walk down to the Federal Reserve and redeem the uncanceled ones. With 217 years of accrued interest, for a $20 bond, that's about $800,000.
Junk bonds prove there's nothing magical in a Aaa bond rating.
If you need to put your money in a safe and secure place and you want it to earn interest, Treasury bonds are safer than putting it in any bank as a deposit or putting it anywhere else, because they are backed by the full faith and credit of the United States Government.
For investors who do want to speculate in high-yield bonds, one alternative may be a junk bond mutual fund, which can offer investors the relative safety of diversification.
The rating agencies historically actually did a pretty good job rating regular bonds.
First I opened a check account. I looked at the - I looked that there was nothing of yield. So I bought some bonds. It was a bond. When I bought this bond, it was duplicated in 10 years. I think it was 10 percent.
Rising interest rates are considered bad for stocks because they raise the cost of doing business and depress corporate earnings and because higher yields make bonds relatively more attractive than stocks to investors.
Public borrowing is costly these days, true, but interest rates on municipal bonds are still considerably lower than those borne by corporate debt.
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