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Corporate Bond
Term category: Bonds
In 10 words or less: A bond issued by a company to raise capital for its operations and/or expansion.

Definition: A bond that is issued by a corporation to investors. Corporate bonds are given letter grades based on how strong the company is, financially. A bond with a low letter grade is often considered "risky", while a bond with a high letter grade is considered "safe."

StockJargon Advice: Corporate bonds are not considered to be as safe as treasury bonds (bonds that are issued by the government). For this reason, it's important to keep up to date with the financial condition of the company.

Bondholders often actively express their opinions when it comes to a company. If they think the company is doing something that will make it harder to pay their debts, bondholders will call them out on it. After all, they want to get their money back!

If a company goes bankrupt, bondholders are paid back before stockholders.

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The truth is that there are risks and investors should be aware of them.

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Bond Ratings
Each bond is given a rating that helps investors understand the risks involved. And with greater risks come greater returns.

Related Books

The Bond Book by Annette Thau
How the Bond Market Works by Robert Zipf
Beating the Dow with Bonds By Michael B. O'Higgins
Wall Street Journal Guide to Understanding Money and Investments by Kenneth M. Morris

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