BB+ — S&P / Fitch
Ba1 — Moody’s
This rating is the highest non-investment grade category that the ratings agencies will give to a bond. When rating bond issues based on their risk of default, investment grade bonds will range from AAA/Aaa to BBB-/Baa3, in the parlance of Fitch, Moody’s and S&P.
Below this level, starting with the BB+/Ba1 rating, are High Yield Bonds, also known as Junk Bonds.
If an investor chooses wisely, high yield bonds can be some of the best investments in his or her portfolio. The further down the ratings scale a bond appears, the higher the yield; but there is also a higher risk of default. The higher yield paid out on higher-risk bonds is known as the “risk premium,” which is a concept present throughout the investment world.
Investors in this category of bonds are taking on a mild-to-moderate default risk.
In a persistent low interest rate environment, many investors are pushed into higher-risk financial instruments because they cannot get enough of a return on low-risk investments. High yield bonds can be a good alternative to stocks for these investors.
The same rating system is also used for companies and insurers and gives an idea of how capable each one is of paying off its liabilities.
If there is a lot of hype surrounding the IPO, it may be a good strategy to immediately sell them while the frenzy is on
Bad credit implies that an individual or business has a low credit score or rating. Credit histories are reported and...
A market-on-close order is used to execute a trade at the last possible moment before the market closes for the day
Turnover ratio is a term that can be used in reference to the rate at which a company goes through its physical inventory
Collateralized Debt Obligations (CDOs) are bond-like investments backed by debts such as mortgages
It’s good to have the opinion of advisors who are knowledgeable in various areas of your planning and portfolio, but...
Long-term debt refers to the duration of a liability/amount owed, and to qualify it must be due at least 12 months out
The Dividend Discount Model (DDM) is a method for valuing a stock, that looks at expected future dividend payouts and adjusts to present value.
The barbell strategy divides a sum, for instance $10,000, equally among bonds with short duration and bonds with long duration.
The Rectangle Bottom pattern forms when a stock price is stuck in a range bound motion, between support/resistance levels