Are High Yield Wk5 - paying interest or principal in a...

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Are High Yield (formerly referred to as "Junk") Bonds necessarily a bad investment? On what would this  depend? What is the financial impact on a company when their debt rating is viewed as, "High Yield"?  What specific  steps must a firm undertake to improve their credit rating under the current rating system? High-yield bonds are issued by organizations that do not qualify for investment-grade ratings. Credit rating agencies evaluate issuers and assign ratings based on their opinions of the issuer’s ability to pay interest and principal as scheduled. Those issuers with a greater risk of default not
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Unformatted text preview: paying interest or principal in a timely manner are rated below investment grade. These issuers must pay a higher interest rate to attract investors to buy their bonds and to compensate them for the risks associated with investing in organizations of lower credit quality. Organizations that issue high-yield debt include many different types of U.S. corporations, certain U.S. banks, various foreign governments and a few foreign corporations. Brigham, E. F., & Ehrhardt, M. C. (2011). Financial management: theory and practice. Australia: South-Western Cengage Learning...
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