Series 7 Exam Prep FREE (Corporate Bonds)

A corporate bond is a debt security issued by a corporation and sold to investors. It is a way for a company to raise money by borrowing from investors and promising to pay them back at a later date. Corporate bonds pay a fixed rate of interest to bondholders, which is usually paid twice a year. When the bond matures, the company repays the principal amount to the investor. Corporate bonds are rated by credit rating agencies, which evaluate the creditworthiness of the issuer and assign a rating based on the likelihood of the issuer defaulting on its payment obligations.