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There is a lot more to junk bond risk than interest rate risk. The history is that people get seduced into buying them because you get a little bit more yield for "a little bit more risk." You walk that line until until you realize you are on very thin ice.

Prices collapse in junk bonds when institutional investors realize they are into some very risky investments and bail out with no buyers.

We have been through the derivatives purge. It think it was Orange Co. CA who had problems with their pension funds. We went through a stage when people wondered if their insurance companies were going to be able to make their annuity payments. All were getting very high yields on junk bond investments that proved to be shakey.

Be very, very careful with junk bond funds. They are not just bonds.
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