Your grandfather has great faith in bonds and has heard about some "high yield bonds" that are available. He has asked you for your opinion. What advice will you give him?

That they are risky

Explanation:

Bonds tend to give a low return compared to other investments such as stocks which is because they offer a constant payout. However even with bonds there will still be those that promise a higher return than the others and this is because they are riskier.

Bonds are debt instruments which means that the rate they pay is directly related to the risk attached. This is because the interest payment is meant to compensate you for the risk you are taking by getting that bond.

If the yield/return is high it would therefore follow that the risk Is high as well. Your Grandfather should therefore be aware of this risk before investing because riskier bonds might not pay back.

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