junk bond

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

Junk bonds are high-risk debt instruments issued by entities with low credit ratings, offering higher yields to compensate for default risk.

- Used in treasury and financial management for funding, investment, and risk decisions.
- Used to evaluate cash flows, financing costs, and capital structure.

- Example: Finance teams use **junk bond** when planning funding needs and managing cash and risk.

- Why it matters: Supports liquidity and risk control and improves the quality of financing and investment decisions.