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Definition: An unsafe bond that pays a high interest rate (sometimes as high as 15-20%!). If a junk bond defaults, you might not even get your initial investment back.
TeenAnalyst Advice: Junk bonds were popular in the 1980's because corporate raiders used these to finance the takeover of large companies. They're not quite as popular today.Junk bonds carry high rates of return but they're as risky or riskier than stocks are. There's a chance the company will default and you'll lose your entire investment.
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