A debt security issued by a company to borrow money from investors. When you buy a corporate bond, you are lending money to the company, and they promise to pay you interest and return your principal at maturity. Corporate bonds typically pay higher interest rates than government bonds because companies are riskier than governments.
You buy a corporate bond from a large bank for $5,000 that pays 5% interest per year for 5 years. Each year you receive $250 in interest payments. At the end of 5 years, the bank pays you back your $5,000. If the bank faces financial trouble, there is a risk you might not get all your money back.
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