junk-bond
UK[ˈdʒʌŋk bɒnd]US[ˈdʒʌŋk bɑːnd]
n
A high-yield, high-risk bond, typically issued by a company seeking to raise money quickly in order to finance a takeover or because it has a poor credit rating.
Morpheme Breakdown
junk
bond
junk
worthless
bond
debt instrument
Etymology
The term 'junk-bond' is a modern financial compound, originating in American English in the 1970s. The word 'junk' carries its colloquial sense of worthless or low-quality material, metaphorically applied to bonds considered to be of low creditworthiness and high risk. 'Bond' retains its core meaning of a binding financial obligation or debt instrument. The compound thus logically creates a term for a debt security that is deemed to be as risky and potentially worthless as discarded material, contrasting with investment-grade bonds.
Analysis
Structure: junk (worthless) + bond (debt instrument)
junk: From English 'junk', meaning old or discarded material. Its origin is uncertain, possibly from Middle English 'jonk' (old cable or rope) or Latin 'juncus' (rush, reed, used for making ropes).
bond: From Middle English 'band' or 'bond', meaning a binding agreement or shackle, from Old Norse 'band', meaning something that binds.
Examples
The company financed its aggressive expansion by issuing junk-bonds.
Many investors were hurt when the market for junk-bonds collapsed.
The fund specializes in high-yield, or so-called junk-bond, investments.