Final answer:
Junk bonds have varying maturities and are high-risk, high-yield corporate bonds. Investors manage risk by diversifying through mutual funds and considering liquidity and present value. They carry higher default risk, which can lead to issuer bankruptcy and potential losses for bondholders.
Step-by-step explanation:
Junk bonds indeed have varying maturities like other forms of bonds. The maturity date is when the borrower must repay the bond's principal amount. Junk bonds are considered to be of higher risk compared to government or high-grade corporate bonds. The term 'junk bond' refers to corporate bonds issued by companies that have higher risk of default, and therefore they offer higher interest rates to compensate investors for that risk.
Investors may attempt to manage risk with junk bonds by diversifying their holdings through mutual funds, which can buy a range of bonds from different issuers. A diversified portfolio can mitigate the risk of default that is inherent in junk bonds. Keeping in mind the concept of liquidity, and understanding the present value, investors aim to balance their portfolio according to their risk tolerance and investment goals. They should also be aware of the implications should the issuer fail to meet its obligations; it could lead to bankruptcy proceedings where they might recover lesser than the bond's face value.