Corporate Bonds: Gems and Junk
Corporate bonds are debt instruments that corporations issue in order to borrow money. The companies use these funds for a variety of reasons, from expanding their business to purchasing needed equipment. It is not uncommon for companies to issue both bonds and shares of stock. Keep in mind that the distinction between the two is that bonds are loans that the corporation agrees to pay back with interest over a certain period of time; stock represents ownership in the company. This distinction is especially important should the company declare bankruptcy, as the bondholders would usually have priority ...
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