junk bond
Financial Dictionary — Finance & Investments
Definition
Junk bonds: Bonds issued by a company with low creditworthiness and carrying a high risk of default; It generally offers a high interest rate to compensate for the high risk
Use cases, Example & Why it matters
Use cases
- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.
- Used to evaluate cash flows, financing costs, and capital structure.
Example
- Example: Finance teams use **junk bond** when planning funding needs and managing cash and risk.
Why it matters
- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.