A corporate bond is a debt security issued by a corporation and sold to investors. The backing for the bond is usually the ability of the company to repay the borrowed amounts, which is the money that is earned from profits and future operations. Sometimes, the company's physical assets are pledged as collateral. Corporate bonds are debt securities, issued by both private and public corporations. Companies issue corporate bonds to raise money for a variety of needs, such as building a new plant, purchasing equipment, or growing the business.
SEE ALSO: Voter id card correction form
Corporate bonds are debt securities issued by private and public corporations. When an investor buys a corporate bond he/she lends money to the "issuer," the company that issued the bond. In exchange, the company promises to return the money, also known as "principal," on a specified maturity date. Until that date, the company usually pays you a rate of interest, generally semi annually.
Want to know more on Investment Planning? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.
SEE ALSO: Venture Capital In India
Corporate Bonds can be broadly classified in the following categories. Listed below are the types of bond and their sub categories:
Based on Maturity Period:
Based on Coupon:
SEE ALSO: What Is A Bond?
In India, an investor who wants to purchase bonds must have a Demat account. A Demat account enables the user to purchase and hold the bonds in an electronic format. In India, you can buy corporate bonds in the following ways:
Yield is a tool that is used to measure the amount of returns the investor gains from one bond against another. It enables one to make informed decisions on which bond to buy. In essence, yield is the rate of return on bond investment. However, it is not fixed, like a bond's stated interest rate. It changes by reflecting the price movements in a bond caused by fluctuating interest rates.
The advantages of corporate bonds are as follows:
The disadvantages of corporate bonds are as follows:
Corporate bonds are considered to have a higher risk than government bonds. As a result, interest rates are almost always higher on corporate bonds.
See Also: corporate tax in india
You May Also Watch:
Have a complaint against any company? IndianMoney.com's complaint portal IamCheated.com can help resolve the issue. Just visit IamCheated.com and lodge your complaint. If you want to post a review on any company you can post it on IndianMoney review and complaint portal IamCheated.com.
Keep your Financial Cognizance up to date with IndianMoney App. Download NOW for simple tips & solutions for your financial wellbeing.
Be Wise, Get Rich
This is to inform that Suvision Holdings Pvt Ltd ("IndianMoney.com") do not charge any fees/security deposit/advances towards outsourcing any of its activities. All stake holders are cautioned against any such fraud.