Corporate Bonds

1263 WordsJun 7, 20146 Pages
Corporate bonds have had a long thriving history in the fixed income market. The first corporate bond issued dates back to the construction of railroads after the conclusion of the Civil War. Increasing in popularity each year, the corporate bond issuance rate has been on a steady incline with daily trading in the billions. Corporate bonds are very complex but simple enough to where everyone can increase their wealth by investing in them. Essentially corporate bonds are debt that a company issues to the investor. Issued by either a private or public company, companies use these funds to build facilities, buy equipment and/ or expand their business. These businesses are typically public utilities, transportation companies, industrial…show more content…
There are many advantages for corporations, banks, or investors to look into investing or issuing Eurobonds. One of the advantages is that Eurobonds is that they have no currency exchange risk because the bond is issued and repaid in U.S. dollars. This is an advantage because the dollar is the reserve currency of the world. These particular bonds are also more favorable to the issuer because they are easily transferable and require less investment and effort. The income is for the most part untaxed and the coupon interest needs to be paid is less than that of other international bonds. In general, corporate bonds have many advantages to the company and the investor. The investor is actually safer when they decide to buy corporate bonds in comparison to stocks. When investing in stocks there is uncertainty in the return you will receive. However when investing in bonds you know the amount that you will receive in certain increments at a set time. Most bonds have fixed coupon payments for the duration of the bond. These coupon payments are usually semi-annually, yearly, monthly, quarterly, or at the maturity of the bond. Also the payments are set at the issuance of the bond so the bondholder receives a known fixed income when they purchase a bond from a company.
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