What is a corporate bond?

A corporate bond is a debt obligation issued by a business to raise money. Corporate bond buyers are lending money to the company, while the company has a legal obligation to pay interest as agreed to bondholders. When a corporate bond matures, or reaches the end of the term, the company repays the bondholder. Image source: Getty Images.

Are corporate bonds a risky investment?

Corporate bonds tend to be a less risky investment than stocks, but involve more risk than Treasury or municipal bonds. Corporate bonds vary in their maturity, interest payments and credit rating. Bond prices are negatively correlated to market interest rates. When interest rates rise, bond prices fall, and vice versa. What is a corporate bond?

Are corporate bonds a good investment?

As noted, the biggest benefit of corporate bonds is stability. Bonds tend to hold up across every economic environment as long as the issuing company remains in good shape. Even the best companies' stocks can crash with the market, and this volatility can lead to big losses if you need to sell at a specific time.