Corporate Bond
A debt security from a corporation offering periodic payments and principal return.
Detailed Description
Corporate Bond
What are the main purposes for which corporations issue bonds?
Corporations issue bonds to raise capital for financing new projects, expanding operations, or refinancing existing debt.
What is the difference between investment-grade and high-yield corporate bonds?
Investment-grade bonds are issued by financially stable companies and are considered safer, while high-yield (junk) bonds are issued by companies with lower credit ratings and carry higher risks.
What are convertible bonds?
Convertible bonds can be converted into a predetermined number of the issuer's equity shares, allowing investors to benefit from potential stock performance.
What risks are associated with investing in corporate bonds?
The primary risks include credit risk, interest rate risk, liquidity risk, and inflation risk.
How can investors purchase corporate bonds?
Investors can purchase corporate bonds directly through brokerage accounts or through bond mutual funds or exchange-traded funds (ETFs) for diversified exposure.