To critically think about: The similarity between junk bonds and 100-year bonds, and the reason why critics call them “equity in disguise”. Introduction: Junk bonds are bonds with a rating below investment grade. The rating agencies rate junk bonds below the investment grade (BBB or Baa). Hence, junk bonds will have ratings such as BB, Ba, B, CCC, Caa, CC, Ca, C, and D. The yields and the default risk of junk bonds are very high. The 100-year bonds are bonds with maturity period of 100 years.

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Chapter 6, Problem 14CTCR

Summary Introduction

To critically think about: The similarity between junk bonds and 100-year bonds, and the reason why critics call them “equity in disguise”.

Introduction:

Junk bonds are bonds with a rating below investment grade. The rating agencies rate junk bonds below the investment grade (BBB or Baa). Hence, junk bonds will have ratings such as BB, Ba, B, CCC, Caa, CC, Ca, C, and D. The yields and the default risk of junk bonds are very high.

The 100-year bonds are bonds with maturity period of 100 years.

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