Corporate Bond
InvestingGlossary term
Definition
A debt security issued by a corporation to raise capital, paying regular interest to bondholders. Corporate bonds offer higher yields than government bonds but carry more risk. Credit ratings from agencies like Moody's and S&P indicate default risk.
Related terms
- BondA fixed-income investment where an investor loans money to an entity (government or corporation) that borrows the funds for a defined period at a fixed interest rate.
- Municipal BondA bond issued by a state, city, or county to fund public projects like schools, roads, and hospitals. Interest income is typically exempt from federal taxes and often from state taxes if you live in the issuing state, making them attractive to high-income investors.
- Junk BondA high-yield bond with a credit rating below investment grade (BB or lower), issued by companies with higher default risk. Junk bonds offer significantly higher interest rates to compensate investors for the increased risk of the issuer failing to repay.
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