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A Corporate bond is a type of bond issued by a
corporation, as the name suggests. Corporate bonds often pay higher
rates than government or municipal bonds, because they carry more
risk. The bondholder receives interest payments (yield) and the
principal is repaid on a fixed maturity date. Corporate bonds can
mature anywhere between 1 to 30 years. Bond Prices are generally
reflected by changes in interest rates. Corporate bonds are traded
on major exchanges and are taxable.
Corporate bonds have a ratings and yields because
the financial health of the issuers can vary widely. A high-quality
blue chip company might have bonds carrying a Standard & Poor's Investment
Grade
rating such as AA (with a low yield but a lower risk of default),
while a less established company might have investment grade rating
such as BB.
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