ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business.

Detailed explanation-2: -What Is a Corporate Bond? Corporate bonds are issued by companies. Issuing bonds is another way for companies to access cash without diluting ownership through additional stock issues or by going to a traditional lender and taking out a loan. Bond issues can be either publicly traded or private.

Detailed explanation-3: -Bonds are debt instruments in which the investor loans money to an entity. The entity borrows money at a fixed interest rate for a specific time duration. Such an entity can be government, banks or corporates. Hence, when the government issues bonds, they are known as government bonds.

Detailed explanation-4: -Private bond issues do not require registration with the SEC or a rating from rating agencies. Although the company issuing a private bond must provide detailed information for underwriting, distribution is often limited to a select group of investors.

Detailed explanation-5: -Corporate bonds are issued by corporations and usually mature within 1 to 30 years. The bonds usually offer a higher yield than government bonds but carry more risk.