What is a common characteristic of high yield debt?

High yield debt is characterized by higher interest rates, which compensates investors for taking on increased default risk associated with these types of instruments. These bonds, often issued by companies with lower credit ratings, are considered more likely to default compared to investment-grade bonds. Therefore, to attract investors, issuers must offer a higher return in the form of elevated interest rates. This risk-return relationship is fundamental to the bond market and especially pertinent to debt instruments rated below investment grade.

The other choices present traits that do not align with the nature of high yield debt. Lower risk and predictable returns, for instance, pertain more to investment-grade bonds. Amortized payments suggest a structured repayment plan more typical of loans rather than high yield bonds, which might have interest-only payments with a balloon payment at maturity. Lastly, the notion of being paid in full at maturity without interest is not aligned with the principles of high yield debt where interest payments are indeed made, reflecting the higher risk undertaken by investors.