A Corporate Bond is a promissory note given by a corporation. The issuing corporation promises to pay the bond holder a set rate of interest for a set amount of time and to repay the debt on the maturity date. The bond holder is a creditor of the corporation, not an owner.
Generally, Corporate Bonds offer the investor high cash returns, liquidity, and the return of capital at maturity. Bonds can be either secured by specific tangible assets or unsecured. The major issuers of Corporate Bonds are electric, gas, and telephone utility companies, large industrial and financial corporations, and railroads.
Interest rates and general credit worthiness of an issue will affect the price of a bond. Changes in the credit rating of the issuer as well as changes in interest rates may cause the bond's price to rise or fall. Though the bond's price may fluctuate during its lifetime, you will receive the full face value at maturity unless the issuing corporation experiences financial difficulties or defaults on its promise for other reasons.
Corporate Bonds are available with maturities ranging from one to thirty years or longer.
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