Baby Bond

  

Categories: Bonds

That'd be 00.007, where the shaken not stirred thing is...milk.

But no...it's the tiny little piece of paper you keep in your wallet. Just in case. (Cue the lights and sirens.)

Okay...not really. Baby bonds are small bonds worth less than a grand. If you don't have much to spend, baby bonds are your go-to option.

Related or Semi-related Video

Finance: What are High Yield/Junk Bonds?19 Views

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finance a la shmoop. what are high-yield or junk bonds? alright well here are low

00:08

yield bonds, you know Apple Microsoft you know, safe secure sleep [charts]

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like a baby even for Chicken Little those kind of bonds. the sky is not

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falling. all right well here are high-yield bonds Sears you know Toys R

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Us aren't they bankrupt already best buy well someday bankrupt ,yeah not safe not

00:25

secure, the sky among other things like credit ratings is in fact falling. well [definitions on screen]

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why do high-yield bonds yield a lot that is they pay a lot of interest to

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investors why do they do that answer because they have to. right but

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why why do they have to? well because the bonds are risky either the business is

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in danger of dying, or the business has borrowed so much money that it's in [ best buy pictured]

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danger of not being able to pay back the loans. that is their operating profit is

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just barely enough to pay the interest costs on all the loans they've borrowed

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so the risk of default is high and investors demand very high interest for

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taking on the risk of having to go through a potential bankruptcy. the term

01:08

junk was coined in the 1980s when the now-defunct investment bank Drexel [100 dollar bill]

01:13

Burnham Lambert sold boatloads of bonds which had dubious creditworthiness in

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weak backing and so the boatloads of bonds sank and ended up as basically

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junk. and not the Chinese junk that actually sales, a different kind of junk.

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anyway unlike your fancy triple-a bonds which you can see here on this lovely [ boat sails on a lake]

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table ,those junk bonds were riskier than us women in shark-infested waters with a

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bloody nose. so what's the best way to encourage people to do risky possibly

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dangerous things ?well pay them a lot of money. so that's why junk bonds yield

01:45

such killer returns for investors because otherwise well these things [two people frown in front of bond store]

01:49

would never leave the shelf.

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