Corporate Bond
A corporate bond is a bond issued by a company to raise money.
1 min read Learning to Invest
What it means
A corporate bond is a bond issued by a company to raise money. Companies pay investors interest and aim to repay the original amount borrowed when the bond reaches maturity.
Example
A large business issues bonds to fund expansion. Investors receive regular interest payments until the bond matures.
Why it matters
Corporate bonds can offer higher returns than government bonds, but they usually come with higher risk.
The financial strength of the company issuing the bond affects how risky the investment is.
Why do corporate bonds usually pay more interest?
Investors generally expect a higher return for taking on additional risk compared with lending to governments.