Stock Market Glossary
High yield
Bonds with a low credit rating but a higher coupon.
In brief: Bonds with a low credit rating but a higher coupon.
Meaning in practice
High-yield or junk bonds offer attractive returns but are at high risk of default and often correlate with stocks. Suitable for addition to larger portfolios, not as a replacement for safe government bonds.
Context for investors and traders
For investors, the term becomes practical in the context of objectives, time horizon, risk capacity and costs. A suitable solution can differ between two people even when they consider the same product or metric.
How to use this in practice
Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.
What to keep in mind
Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.
