Financial Success Guide

What are Corporate Bonds?

Section 25 Module 6

Corporate Bonds

Note: The typical rates of return quoted above are from investment grade corporate bonds in developed countries. High-yield and junk bonds typically offer higher rates of interest.

Corporate Bonds

  1. When you buy Corporate Bonds, you are lending money to a company.
  2. Corporate Bonds are debt Instruments ?and the company owes you money.
  3. The ability of a corporate to pay back its debt is called its Credit Rating.
  4. The company uses your money to create new products, expand & pays a fixed interest on your investment.
  5. If the corporate goes bankrupt, you can lose some or all of your money.
  6. Corporate bonds are capital protected on paper, and bond holders get paid before stock holders if the company goes bankrupt.
Remember - Corporate bonds offer high rates of return because they cannot print money like government bonds, and there is a significant capital risk if the company fails.