Introduction
Investing in bonds is popular among investors who want a stable source of income with comparatively low risk. Two commonly available types of bonds are corporate bonds and government bonds. Both offer a fixed income, but there are distinct differences between the two. In this article, we will compare corporate bonds and government bonds, examining their characteristics, risks, benefits, and other factors that investors should consider before making a decision.
1. Definition of Corporate Bonds
Corporate bonds are debt securities issued by corporations to raise capital for various purposes, such as expansion, mergers, or operational requirements. When investors buy corporate bonds, they essentially loan money to the issuing company in exchange for regular interest payments and the repayment of the principal amount at maturity.
