Glossary

Corporate bonds are debt securities issued by private corporations to raise capital for various purposes, such as funding operations, expanding facilities, or launching new products.

Investors who purchase these bonds are essentially lending money to the issuing corporation, which promises to repay the principal amount upon maturity and make periodic interest payments throughout the bond's life. 💼💵

For example, a tech company might issue a 10-year corporate bond with a face value of $1,000 and a 4% coupon rate to finance a new research facility. Bondholders would receive annual interest payments of $40 until the bond matures, at which point the company would repay the initial $1,000.

Fun fact: Corporate bonds are typically riskier than government bonds, as corporations are more likely to default on their debt obligations. However, they usually offer higher yields to compensate for the increased risk. 🎢