Risks and Rewards of Corporate Bonds


Risks and Rewards of Corporate Bonds

Corporate bonds are debt securities issued by corporations to raise capital for various purposes, such as financing expansion, funding acquisitions, or refinancing existing debt.​ They are a popular choice for investors seeking fixed income investments and are often seen as an alternative to government bonds.​ However, like any investment, corporate bonds come with their own set of risks and rewards.​ In this article, we will explore the risks and rewards of investing in corporate bonds.​

Risks of Corporate Bonds

1.​ Credit Risk

Credit risk is the risk that the company issuing the bond will default on its payments of interest and principal.​ If a company goes bankrupt, the bondholders may not receive the full amount of their investment back.​ Higher-risk companies typically offer higher yields to compensate investors for the increased credit risk.​

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