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How do high-yield bonds work?


A company usually enlists with the help of an investment bank to create a high-yield bond offering. After the terms are determined, the bonds are then sold to investors. The bonds that are sold before they mature are transferred into the secondary market where brokers and dealers offer them to other investors. A company bond typically pays fixed interest payments, often called a 'coupon,'' two to three times a year. At maturity, the investor should receive their full investment, assuming the company is financially sound.