Question: Junk Bonds. Junk bonds are company bonds with low credit ratings due to a higher than average likelihood of default. On the upside, the high risk of junk bonds can yield high returns if the issuer survives and repays its debt. Investors in junk bonds identify and buy bonds with low credit ratings when they believe those bonds will survive and payoff their obligations.
1. What is your opinion of a junk bond?
2. What would be a good strategy to purchase junk bonds?