A curmudgeon's view of junk bonds.

The past few years have seen the development of a market for original issue high-yield bonds, the so-called Junk Bond Market, which has developed as an alternative to private placements. The demand side of the Junk Bond Market is the subject of this paper. This paper examines the behavior of low-grade corporate bonds over the period of 1962-74 to address three related issues. Do low-grade bonds actually deliver realized returns in excess of those on high-grade bonds? If differences exist, do they represent abnormal returns, or simply compensation for risk bearing? How is inference about low-grade bonds affected by sample default experience?