Short excerpt from a YouTube video by Ndubuisi 'Andy' Egwim explaining bond categories (investment-grade ratings like A/B/C versus junk bonds) and the basic risk–reward principle: riskier issuers may offer much higher yields (example cited: firms offering 20–40%) to compensate for default risk.
But there's investment grade bonds. But there's also different rates of bonds. There's A, B, C. There's now junk bonds. Junk bonds are like bonds that people might not even want to touch it in the first place. Like this company even going to survive. But the company is willing to pay 20%, 30%, 40%. So some people will be willing to take the risk. What is important is to understand that if you are taking more risk, you should be getting more reward. This is just the basis of risk in investment. If you're taking more risk, should be getting more re.
