A corporate bond is a type of debt security issued by a company to investors in exchange for capital, with the investor receiving a set number of interest payments.
What is a bond?
A bond is a form of debt issued by governments and corporations that pays a fixed interest rate until the maturity date.
What type of entities issue bonds?
Bonds are issued by governments and corporations.
What is the interest rate of a bond?
Bonds typically pay a fixed interest rate.
When does a bond mature?
Bonds have a maturity date, which is the date on which the bond must be repaid.
Key Points
Bonds are a Form of Debt
Bonds are a form of debt taken out by companies to finance operations, expansions, or other activities. Companies issue bonds in order to raise capital and make payments to bondholders who loan money to the company.
Bond Terms
The terms of a bond include the maturity, coupon, tax status, and callability. The maturity is the time period in which the loan must be repaid. The coupon is the rate of interest that the company pays out to bondholders. The tax status of the bond determines how it is treated for federal and state taxes, and callability allows the company to buy back the bond at any time.
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