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Corporate bond

Be sure to check out the definition of a bond first. Bonds are types of loans that companies, governments, and similar entities offer as a way to earn capital. A corporate bond, then, is issued by a company and sold to investors.

Example: Corporate bonds work like other bonds in that a company will sell a debt security to investors in order to raise capital (aka cash). They’ll set a pre-determined interest rate and a term for the bond. If you purchased the bond at a 3% interest rate with a 10-year term, you’d receive 3% of whatever you purchased the bond for during those ten years.

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