A high-yield bond is a type of debt security that offers higher interest rates compared to investment-grade bonds. These bonds are issued by companies or entities with lower credit ratings, which means they carry a higher risk of default. Investors are attracted to high-yield bonds for the potential of greater returns, but they must also be aware of the increased risk involved. Due to their higher risk, high-yield bonds are often referred to as junk bonds. They can be an important part of a diversified investment portfolio, providing opportunities for income and capital appreciation. However, investors should carefully assess their risk tolerance before investing in these securities.