Corporate Bonds

A corporate bond is a debt security issued by a company in order to expand its business. Corporate bonds are generally issued with a maturity of over a year. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. Also, the company’s physical assets may be used as collateral for bonds. Corporate bonds are considered higher risk than government bonds. The higher a company’s perceived credit quality, the easier it becomes to issue higher amounts of debt at lower rates.

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