What is a corporate bond?

Corporate bonds are debt issued by companies that pay the bondholder interest and return the bond's principal at maturity.  For example, the Albertsons 7.45% '29 bond pays the bondholder a coupon of 7.45% each year and then returns the face value of the bond -- $1,000 per bond -- in 2029.  If an investor owned 10 of these bonds, he would receive $745 of interest each year, paid semi-annually.

Today, BondSavvy only recommends bonds issued by US-based companies.  These companies range in credit quality and, as a result, investors can select from a variety of investment choices offering different levels of risk and return.

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How do corporate bonds work?

Corporate bonds are issued by companies and create a number of obligations the issuing companies must fulfill that are more stringent than when companies issue stock.  With corporate bonds, issuing companies pay bondholders interest semi-annually.  For example,... Read more