Corporate Bond

Corporations issue bonds to raise money.  Bonds constitute a debt owed by the corporate issuer to the bondholder, usually with the promise to pay a specified rate of interest over a fixed period of time.  Alternatively, bonds may be issued at a discount, with interest income being the difference between the discount (purchase) price and redemption value.  Some bonds are secured by collateral, while others, such as debentures, are backed only by the company’s good faith and credit standing.