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Corporate Bond

Glossary

A corporate bond is a debt instrument issued by a company to raise capital. Investors who buy corporate bonds lend money to the company in exchange for periodic interest payments (coupon payments) and repayment of the principal at maturity.

Corporate bonds are classified by credit ratings:

  • Investment-grade bonds (AAA to BBB-) are considered lower risk.
  • High-yield (junk) bonds (BB+ and below) carry higher risk but offer higher interest rates.

Unlike stocks, corporate bonds provide fixed income, making them popular among conservative investors seeking stability and predictable returns. See also: Bonds and Bond Yield