If Investment in Junk Bond decrease will it affect the economic cycle? will it cause recession?

Update:

Junk bonds are bonds which are issued by firms that have lower possiblity of repaying.

1 Answer

Relevance
  • Oiy
    Lv 6
    1 month ago

    Junk bond comes always with recession. The economic downturn causes the firm to debunk the bonds. It cannot pay the interest. These will add to the non performing loans in the banking sector which can cause a bank run.

Still have questions? Get your answers by asking now.